--China may launch a junk-bond market as early as this month, could expand access to credit for smaller private firms--

The China Securities Regulatory Commission (CSRC) has met with executives at the country's key brokerage houses and told them it wants a market for high-yield bonds, the China Business News, a Shanghai-based daily, cited attendees at the meeting as saying.

Zhou Ruanfan, a senior vice president from the Pengyuan Credit Rating Co Ltd, was quoted by the newspaper as saying that the CSRC had drafted rules for the bonds, which offer higher yields and more risk than investment-grade corporate bonds. Small, unlisted firms and other qualified entities will be allowed to sell the bonds under a market-based registration system, which means regulators won’t examine and approve every issue.

The high-yield bond market will support China's economic growth by providing a much-needed source of financing to smaller firms. It would be unrealistic to expect the junk-bond market to make a fundamental change in China’s bond market structure, according to Yin Jianfeng, a deputy director with the Institute of Finance and Banking of the Chinese Academy of Social Sciences.