Some Chinese companies are improperly issuing offshore debt, China's top economic planning agency said on Thursday, warning that violators will be penalized and signaling concern over corporate offshore debt as the yuan resumes its slide against the dollar.
The National Development and Reform Commission's (NDRC) notice also said that issuers, underwriters and law offices that do not follow proper notification and registration procedures will be added to a national blacklist and punished.
Companies issuing foreign debt should carefully consider trends in international capital markets and strengthen risk management, the NDRC said in a notice posted on its website.
The yuan's weakness against the dollar exposes Chinese companies that have borrowed dollars overseas or engaged in hedging contracts to a rising risk of foreign exchange losses.
China experienced record net capital outflows of around $463 billion in 2015, according to a recent report by the U.S.-based Institute of International Finance. Much of that, analysts said, was due to Chinese companies paying off foreign currency debt in the fear that further yuan depreciation would expose them to unmanageable risks.
After a sell-off in the yuan that hit global markets in late 2015 and early this year, China's currency had been largely stable until late April and outflows had slowed.
Earlier this week, the Shanghai Securities News reported that China's insurance regulator is cracking down on illegal sales of foreign insurance products to Chinese nationals. The purchase of such products, which can sometimes be used as collateral for foreign currency loans, has been one popular way to move capital out of the country.
