March 12, 2020 / 12:02 PM / a month ago

UPDATE 1-China to make it easier for firms hit by coronavirus to borrow overseas

(Adds details)

BEIJING, March 12 (Reuters) - China’s foreign exchange regulator said on Thursday it has relaxed the way it assesses cross-border financing risks to make it easier for domestic firms hit by the coronavirus outbreak to raise more funds in overseas markets.

The State Administration of Foreign Exchange (SAFE) has increased a parameter on cross-border financing under its macroprudential assessments to 1.25 from 1, effectively giving more room for firms to borrow abroad, the regulator said.

“This will facilitate domestic institutions, especially small and medium-sized firms and private firms, to make full use of the two resources and markets at home and abroad and raise funds through multiple channels,” the SAFE said in a statement on its website.

Increased foreign borrowings will ease domestic firms’ financing difficulties and high financing costs, as they seek to resume operations, the regulator said.

China’s central bank has issued a series of steps to cushion the economic blow of the virus outbreak, cutting the benchmark lending rate and making cheap subsidised loans to encourage bank lending to selected firms.

China’s foreign debt risks are generally under control and adjusting the way it assesses cross-border financing risks will not lead to a sharp rise in China’s foreign debt, the SAFE said.

China’s outstanding foreign debt rose to $2.03 trillion at the end of September 2019 from $1.998 trillion at the end of June, according to the SAFE’s latest data.

The regulator said it would actively prevent risks from cross-border capital flows and safeguard national economic and financial security. (Reporting by Kevin Yao and Stella Qiu; editing by Kevin Liffey and Barbara Lewis)

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