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The French finance minister Monday announced plans to launch a trading platform for European corporate bonds denominated in euros in Paris in a bid to divert a slice of the growing corporate bond market away from London as well as to increase transparency on bond transactions.

The initiative is part of a wider push to make France more competitive in terms of euro-denominated bond issuance, which currently mostly takes place out of London or out of Luxembourg.

France's securities watchdog, the Autorite des Marches Financiers, has recently introduced a raft of new measures aimed at simplifying procedures for companies to issue bonds out of Paris.

This, along with the recent lowering of listing fees for corporate bonds by NYSE Euronext (NYX), is aimed at capturing a growing share of the European corporate bond market, which has become an increased source of funding for European companies amid continuing reluctance to lend from banks due to the economic slowdown.

Last year, European corporate bond issuance reached a record level of EUR251.9 billion, compared with EUR133.5 billion in 2008, according to data compiled by Societe Generale (GLE.FR).

"This puts Paris on a level playing field" with other market places such as London, French Finance Minister Christine Lagarde said Monday at a press conference.

As a result of the relaxation of bond issuance procedures, more than 20 of France's largest corporate bond issuers have pledged to carry out 50% of their total bond issuance out of Paris by next year, compared with only 15% today, Lagarde said.

Large French companies account for 35% of total corporate bond issuance in Europe, according to Paris Europlace, an industry group that aims to promote Paris as a financial center.

The trading platform will be open to transactions on euro-denominated corporate bonds by European as well as international companies, and details of the platform should be finalized by the end of the first quarter.

"This project should increase the liquidity and the transparency of the (corporate Eurobond) secondary market as well as deepen the European dimension of the Paris marketplace," Lagarde added.

Corporate bonds are mostly traded over the counter, in transactions between investors and banks, and via electronic platforms such as MarketAxess, which operates out of the U.K.

The new European bond trading platform aims at reinforcing transparency on bond trades after they have taken place, and its launch will involve all parties concerned, issuers, investors, as well as banks, brokers and exchanges, the French finance ministry said without being more specific.

-By Nathalie Boschat and Jethro Mullen, Dow Jones Newswires; 33 1 4017 1740; nathalie.boschat@dowjones.com; jethro.mullen@dowjones.com

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