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UPDATE 1-China bond market regulator tightens debt issuance rules, bans self-financing

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SHANGHAI, Nov 18 (Reuters) - China’s interbank bond market regulator said on Wednesday that it would tighten rules on debt issuance, including banning the practice of companies funding themselves, to protect investors’ legal interests.

In a statement, the National Association of Financial Market Insitutional Investors (NAFMII), a self-regulating body under the central bank, said the new rules, to be phased in over several months, would help to improve the standardisation of debt financing.

Companies will be banned from buying their own debt issuance, or using related entities to buy up issuance using the issuer’s own capital.

While the rules have been released amid corporate bond market jitters following high profile defaults by Chinese state-owned enterprises, a senior securities firm source in Shanghai said they had been circulated weeks earlier.

“I don’t think it’s related to the defaults,” he said.

The new regulations also will require related parties, including an issuer’s senior executives and major shareholders, to disclose their purchases of the issuer’s debt.

The rules will be phased in though Feb. 1, 2021. (Reporting by Andrew Galbraith and Samuel Shen; Editing by Clarence Fernandez and Kim Coghill)