Direct Financing Of Smes

It is foreseeable that the issuance of small and medium-sized private placement bonds can also play a positive role in improving China's credit market. The future is bright and the road is tortuous. The private debt of small and medium-sized enterprises has made a solid step towards the real market orientation of capital and capital in China.

There is no threshold requirement for net assets and profitability. The issuing interest rate does not exceed 3 times the benchmark interest rate of the same period of the bank loan, and the period is 1 years or more. No guarantee or credit rating is required, no administrative license is allowed, and the filing system is adopted. This kind of corporate bond, which is similar to fully marketization, is the private debt of small and medium-sized enterprises.

For small and medium enterprises with limited financing channels, the formal introduction of private debt is undoubtedly a good news for them. The private debt of small and medium-sized enterprises has also enriched our capital market and provided more opportunities for participants in the capital market such as securities firms and funds.

In the United States, the scale of bond financing of non-financial enterprises is nearly four times that of publicly issued stocks, while China is similar to 1:1, thus we can see the development potential of China's bond market.

Chinese enterprises prefer to finance the stock market. Besides the consideration of the low cost of financing, the financial condition of corporate bond issuance is no less restricted.

Conditions are also an important factor hindering the development of corporate bond market.

With the quickening of the marketization reform of the IPO market and the introduction of compulsory dividends, with the lifting of the mandatory conditions of bond issuance and the leading role of market pricing, any enterprise can directly finance through private debt, and bonds will become one of the main options for enterprises to directly channel their capital.

In the United States, it is equivalent to junk debt, while junk bonds can only be done by investment banks in the United States. However, in China, investors who invest no less than 10 million can meet the requirements of certain conditions.

Mike's first investor fund firmly held these junk bonds.

As a result, in 1974~1976, the first investor fund, which specializes in junk debt, has been the best performing fund in the United States for 3 years in a row.

This is also given much more.

Great imagination.

But the fund's enthusiasm for private equity participation does not seem to be high. According to the statistics of Qing Ke database, only 9% of the hundreds of agencies surveyed indicate that they will invest in private debt, and 53% of them choose to wait and see.

The reason is that the coupon interest rate is still low and the credit rating is not standardized.

The issuance method stipulates that the rate of private debt issuance of SMEs should not exceed 3 times the benchmark interest rate of bank loans, which is far below the interest rate of private lending on the market. This shows that this is still not a kind of market-oriented pricing behavior.

Domestic credit reporting system is still immature, issuers' credibility is worth testing, and there is no definite agreement on the use of funds. Especially, many issuers' associated enterprises are enterprises with serious capital gaps such as real estate. The risk of misappropriation of funds is high, and the effect of fund use is difficult to guarantee.

All of these factors affect the supply of private debt funds.

Of course, as issuers, they can selectively use some credit enhancement measures to improve the attractiveness of the offering, such as setting up guarantees, insurance, additional credit ratings, contractual capital use and liability for breach of contract, and allowing Dong Jiangao to participate in subscription and other measures to enhance credibility. At the same time, choose intermediaries with strong endorsement ability, such as investment banks with high market position and strong underwriting ability, high professional ethics, trusteeship institutions, accounting firms and credit rating agencies will play a good role in increasing credit.