China to improve corporate bond default disposal

China will improve mechanisms on the disposal of corporate credit bond defaults to make the process more market-oriented and rule-based, according to a notice released by the central bank on Wednesday.

The notice clarified the responsibilities and rights of bond issuers, holders, and intermediary agencies, and addressed key issues such as the lack of market-oriented mechanisms for bond default disposal, according to the People's Bank of China.

The country will support diversified channels for bond default disposal to make it more efficient, including the trading of defaulted bonds, and the use of credit derivatives to better manage risks.

Cases of bond defaults have been on the rise in recent years, exposing issues such as inefficiencies in their disposal, the central bank noted.

The notice, effective from August 1 this year, will help defuse risks in the bond market, and better protect investors, the central bank said.