The China Securities Regulatory Commission told leading bond underwriters, such as China Securities International, CITIC Securities, China Merchants Securities and Guotai Junan Securities, to manage the risk of default with extra care, according to 21st Century Business Herald.
At least three brokers were quoted in the report saying they would only underwrite bonds with a credit rating of AA level or above.
Ratings of onshore bonds are graded by mainland agencies which tend to have higher ratings than the international standard, according to Morningstar China director of manager research Rachel Wang. Onshore China bonds with a AA rating might translate to BBB using the international standard.
Over 85% of bonds issued in April had rating above AA-, according to Wind Data, the report said.
A number of brokers also raised concerns during a meeting with the CSRC on underwriting bonds from non-listed privately-owned companies.
There are no restrictions on such issuance, meaning the brokers cannot manager the risks effectively, the report said.
China has had 22 bond defaults year-to-date, exceeding the 21 defaults reported for all of 2015, including those from state-owned enterprises.
China Securities International has been the largest bond underwriter, involved in RMB 451.4bn ($69.4bn) new issuance from 397 companies since mid-2015.