Clifford Chance
Offshore bond issuance eased: SAFE issued rules to facilitate cross-border lending by PRC companies and further consults on relaxing cross-border security regulations
26 February 2014
The Chinese government has long been attempting to loosen control on foreign exchange capital account items in order to facilitate cross-border funds flow. In its continuing efforts to speed up the process of capital account liberalisation, the State Administration of Foreign Exchange (SAFE) has issued the Circular on Further Improving and Adjusting the Foreign Exchange Policies on Capital Account Items (SAFE Circular), which became effective on 10 February 2014. Recently SAFE further initiated a public consultation on draft rules which aim to remove the approval and quota requirements for provision of cross-border security and guarantees. If the rules under the SAFE Consultation are implemented, offshore bond issuances may be structured differently. This briefing studies the impact of the SAFE Circular on cross-border lending by PRC companies and discusses the significance of the rules under the SAFE Consultation on the provision of cross-border security and guarantees by PRC Companies.
