China's securities regulators put a cap on private bond issuance as they seek to curb credit risks at weaker companies, Bloomberg News reported, citing people familiar with the matter.

The China Securities Regulatory Commission and the Shanghai and Shenzhen stock exchanges instructed some brokerages to keep the outstanding value of privately sold corporate bonds on exchanges at or below 40% of issuers' net assets. The cap will be effective for new bond sale applications received after Sept. 19, the sources told Bloomberg.

New bond sales exceeding the ratio will only be used to repay old debt, the Oct. 15 report added. The move is part of China's efforts to curb rising defaults in the private placement market by limiting the financing option for lower-rated firms and local government financing vehicles.