The long-awaited decision is expected to be finalized by the central government at its Financial Work Meeting which will be held today and tomorrow in Beijing, according to people familiar with the matter. The workshop is held once every five years.

The China Securities Regulatory Commission is set to shoulder the responsibility for overseeing debt sales and trading of incorporated enterprises, which include all domestically listed firms, the sources said.

Currently, the National Development & Reform Commission vets corporate applications to sell bonds traded on the country's two stock exchanges by imposing a pre-set annual quota.

After the change, the NDRC will still take charge of debt flotation of some large state-owned enterprises which have yet to be restructured into shareholding ventures, the sources said.

Transferring the supervisory power to the CSRC will be a milestone for China's exchange-based corporate debt markets which only saw 60 billion yuan (US$7.7 billion) of bond issues last year.

Comparatively, the country's inter-bank market, which mainly hosts less-than-one-year corporate bills and is only open to institution members, had total debt sales of 1.66 trillion yuan in the first 11 months of 2006.

"It would likely mean a revival of the stock exchange-based bond market, which has dwindled in recent years, especially in comparison with the dynamic inter-bank market," said Stephen Green, a senior economist at Standard Chartered Bank.

Analysts and market insiders expect the CSRC not to maintain the current quota system, which lets the government decide the amount of funds companies can raise through debt sales.

Instead, the stock regulator may work to streamline the issuance process by adopting a reporting system similar to that employed in the central bank bill market.

The scale and pricing of a debt sale will hinge on market supply and demand as well as a company's rating by independent agencies.

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