UPDATE 1-China lets insurers buy more corporate debt

BEIJING, Oct 22 - China is allowing insurers to invest 40 percent of their assets in corporate debt, up from 30 percent now, so they can improve their asset allocation and spread risks.

The new regulation from the China Insurance Regulatory Commission, dated Sept. 22 but published on the agency's website (www.circ.gov.cn) on Thursday, says the bonds must be rated BBB and above.

Analysts welcomed the directive as positive for China's corporate bond market, whose development has long lagged that of the stock market.

A bond trader with a large bank in Beijing, who declined to be named, said the 40 percent ceiling was sufficient to enable insurers to manage their assets.

"A 10 percent increase is significant and it will bring a lot of benefits to the market," he said.

Jiang Chao, a senior bond analyst at Guotai Junan Securities in Beijing, said the move would boost the market in the long run.

"But in the short term, I don't think the new regulation will change the investment plans of individual insurance companies very much as they usually map things out at the start of the year," Jiang said.