Boston, MA 05/22/2014 (wallstreetpr) – China’s new policy to support cross-border guarantee will be credit positive for Chinese corporate like Baidu Inc (ADR) (NASDAQ:BIDU) as it will allow them to raise offshore funds and aid them in expansions and operations overseas, according to a report issued by Moodys.
New Cross-Border Gurantee Policy
The new policy will take effect starting June 1 and remains majorly unchanged from the earlier draft version on which public comments were solicited in February by the State Administration of Foreign Exchange (SAFE). As per Moody’s Vice President and Senior Credit Officer, Kai Hu, the policy is a major step towards easing stringent capital policies in China. Hu Stated that when SAFE first tabled the policy changes in the beginning of the year than the research firm had mentioned that any explicit guarantee will be more significant to offshore bondholders than credit support mechanisms or keepwell agreements. China’s new policy will now help offshore subsidiaries to get lower financing costs than they could in absence of guarantee. Hu further states that thus, the new credit policy will aid offshore bond issuance and the new policy should also accelerate offshore bond markets growth. Moreover, the Chinese corporates will now be able to target takeover opportunities in a more timely manner.
Artificial Brain Trust
Alongside the new credit policy development, there is another news coming in from the Chinese Internet giant, Baidu. Baidu Inc (ADR) (NASDAQ:BIDU) recently announced that it has brought Andrew Ng on board to take ahead a $300 million research work spanning over the next 5 years for the company, both in China as well as Silicon. With this announcement, Baidu is sure to open its account in Silicon Valley, where uptil now it was literally invisible. NG, who headed artificial intelligence division at Google and is also a cofounder of Coursera, will work from California on the new project.