Recently, the Shanghai Stock Exchange ("SSE") and the Shenzhen Stock Exchange ("SZSE") have released their respective Circular on Matters Concerning Further Strengthening the Credit Risk Management During the Existence of Bonds (the "Circular").
The Circular sets out provisions in respect of "duties in credit risk management", "performance of duties by relevant responsible personnel", "monitoring and categorization of credit risks", "detection of and pre-warning against credit risks", "submission of information on credit risk management", etc. According to the Circular, the trustees shall monitor credit risks in multiple ways and by different means, including but not limited to five methods, such as "reviewing and analyzing information disclosure files released by issuers". Any trustee shall not adjust the risk category of bonds, without proper investigations into risks. Moreover, the Circular notes that where the bonds under special attention or its issuer falls under any of four circumstances, such as "where any negative rumor about the issuer or the bonds it has offered arises in the market", and the status and extent of credit risks are uncertain, the trustee concerned shall launch prompt and proper investigations into possible risks.