China has approved 43 corporate bonds in the first quarter, a sharp rise from the same period last year, in support of the massive construction plan involved in the 4 trillion yuan (US$584.8 billion) stimulus package, according to the data released by the depository house for China's major bonds.

The 43 corporate bonds, of which five were issued by the central State-owned enterprises, totaled 66.73 billion yuan in value, according to the China Government Securities Depository Trust and Clearing Co., Ltd.

In contrast, only 11 such bonds were approved by the National Development and Reform Commission (NDRC), the approving agency, in the first half of last year.

Experts said more such bonds were allowed in a bid to echo the government's 4 trillion yuan stimulus package, which needed huge sums of money to power the massive infrastructure construction and other new projects.

Of the total 4 trillion yuan investment, 1.18 trillion yuan is supplied by the central government. The rest will be financed by local governments and the private capital.

Considering the huge demand by enterprises, NDRC would expand the corporate bond issuance scale to ensure economic growth, an NDRC official told Shanghai Securities News on Saturday.

He said NDRC was working overtime to access the piled-up applications. Money raised by the bond issuance should not be used to make risky investment including shares, futures and real estate, the official stressed.

Companies involved in the construction of infrastructure, sewage treatment, and energy saving would be given priority to issue debt, according to the official.

Based on the current momentum, the total corporate bond sales would likely to top 300 billion yuan this year, analyst with the China Securities Co., Ltd told the newspaper.

Although the bond sales was less than 70 billion yuan in the first quarter, but local governments and non-listed companies have shown great willingness to lend more. The bond sales is expected to peak in the latter of the year, said the analyst.

Chinese government has been cautious on corporate debt issuance as the country lacks comprehensive legal system for bond market.

Only 236.7 billion yuan of corporate bond were issued last year, compared with 812.5 billion yuan of treasury bond sales.

(Xinhua News Agency April 5, 2009)