Research On High Yield Bond In Chinese Market

The finance channel of middle and small firms in China is normallylimited to banks, which is tend to be influenced by the financial policies ofChina and therefore cause finance difficulties. The alternative choice offinance is direct finance by issuing GEM stocks or High Yield Bond.However, the scope and process to issue GEM stocks are limited to bigproblems for most of the middle and small firms. So high yield bondwould be the best choice concerning to the scope and the process. Incurrent bond market, the main obstacle for the developing of High YieldBond is the restriction on the interest rate and debt scale. In this paper, wewill discuss about the products, issuers, investors, agencies, supervisors,policies and market constructions of bond market in China. And we willfind that we can issue and offer High Yield Bond to identified qualifiedintuition investors without break the laws or the acts of China. Moreover,the interest rate and debt scale can even reach the limited of3to4timesnormal interest rate of borrowing and70to80%of total assets separately.During the process, the reimburse fund and investors protection policiesare both required to limited the default risk as well as the influence. This isa very effective method to help those middle and small firms to get analternative finance channel. On the other hand, those institution investorswith good research and anti-risk capability will get plenty of return frominvesting High Yield Bond. Therefore, the development of the High Yield Bond market will improve the allocation of finance resource in the financemarket of China.