China allowed more international investors to buy bonds on thenation's largest debt market and purchase higher-yielding notes forthe first time, as the world's second-biggest economy develops itscapital markets.

Participants in the Qualified Foreign Institutional Investorprogram are now allowed to buy bonds on the interbank market, theChina Securities Regulatory Commission said in a July 27 statementon its website. Previously, they were restricted to exchange-listeddebt, which is less than 2 percent of the interbank equivalent.

International investors will also now be permitted to buy bondsof small- and medium-sized companies through private placements,the regulator said. Such securities typically yield more than theircounterparts listed on China's stock exchanges.