The Annual Examination Of Bond Underwriting For Brokerages: "Stepping On Thunder" Under Frequent Competition And Innovating Business Entry

At the end of the year, scale wars are everywhere.

Wind data show that as of December 17th, the total bond underwriting amount of 94 brokerages totaled 7 trillion and 160 billion yuan, an increase of 1 trillion and 480 billion yuan over last year's 5 trillion and 680 billion yuan, an increase of 26% over the same period last year. Judging from the ranking of institutions, there are also some adjustments.

In fact, under the background of regulators' efforts to combat bond underwriting "price war" and structured issuance this year, the bond business ecology of various institutions has also changed.

Meanwhile, credit default incidents continue to increase this year. Wind data show that since December this year, 176 bonds have been defaulted on 17, and the default scale is 141 billion 326 million yuan, which continues to grow compared with the 125 and 120 billion 961 million figures in 2018. Of course, the incidents of underwriting by the underwriters are also frequent.

"The main keynote of this year's market is to attach importance to compliance with wind control and to dilute the scale of competition. In fact, the Matthew effect in the industry is becoming more and more obvious. There are more opportunities for the head broker, and the pressure for the survival of small and medium brokerages will also be greater. In December 18th, a bond broker of a medium-sized brokerage in Shanghai told the business reporter in twenty-first Century.

Under the background of regulators' efforts to combat bond underwriting such as price war and structured issuance this year, the bond business ecology of various institutions has also changed. - Song Wenhui photo

State sea default most

"At the end of the year, we are in the rush stage, and we have just made some lists of city investment companies and large state-owned enterprises." A bond underwriter of a large brokerage firm in Beijing told the twenty-first Century economic news reporter.

Just like the current ranking of the underwriting scale, competition has entered the white hot stage.

In twenty-first Century, according to the Wind data, according to the data compiled by the economist in twenty-first Century, as of December 17th, the top three listed companies in the list of bond underwriting amount are CITIC Securities, CITIC Securities and CICC, with the total underwriting amount of 910 billion 177 million yuan, 813 billion 75 million yuan and 495 billion 971 million yuan respectively, compared with the growth figures of last year's whole year.

At the same time, compared with the list of underwriting in 2018, the top three are CITIC Securities, CITIC Securities and China Merchants Securities.

CICC has already surpassed its former merchants securities listed last year, and its total underwriting amount has exceeded 10 billion yuan. China Merchants Securities ranked fifth in this year. At the same time, Guotai Junan Securities's achievements this year have surpassed that of China Merchants Securities.

However, competition remains fierce. Currently, the total underwriting amount of Haitong Securities in the sixth place is only 6 billion 255 million yuan in line with its previous investment securities. There are still two weeks away from the end of the year, and there is uncertainty in the final outcome.

On the whole, a total of 16 brokerages who have entered the underwriting amount of "100 billion clubs" have reached 17 as of December this year, compared with last year, another one was Shen Wan Hongyuan securities. Data show that the total underwriting amount of Shen Wan Hongyuan securities up to December 17th is 151 billion 199 million yuan, compared with 92 billion 530 million yuan last year, an increase of 63%.

On the other hand, the number of bond defaults has increased year by year, and underwriters are more common.

In twenty-first Century, according to the Wind data, according to the data compiled by the economic news reporter in twenty-first Century, as of December 17th this year, there were 421 debentures in the market, involving 63 brokerages, among which 23 of the largest number of underwriting bonds were state securities.

In addition to Guo Hai securities, the number of default in the number of underwriting bonds ranked two or three, respectively, CITIC investment securities and China Merchants Securities, 21 and 17 respectively.

Compared with the scale of underwriting, CITIC investment securities ranked second in 2018 and 2019, and China Merchants Securities ranked five in the past two years.

Specifically, CITIC Securities underwrites many bonds issued by "star companies" in many bond markets, and these bonds are also moving towards default. For example, Dongxu photoelectric, West Wang Group, three cell group, Huaxin group, LETV net and so on.

Companies that used to rush to do business are now reduced to "minefields".

"At present, the ratio of issuers of default bonds to private enterprises is still very high. After experiencing the deleveraging of financing, although private enterprises are still facing difficulties in issuing bonds, the issuers of poor qualifications are hard to get market recognition. The securities brokers said the debt.

The market is becoming more standardized.

It is worth noting that in the market environment to adjust the pace of business at the same time, regulators this year also targeted at the primary market bond issuance problems, one after another to solve.

As mentioned by the bond underwriters mentioned above, this year's bond business has been summed up mainly as "reclosing the rules and reducing the scale". Compliance is at the key position.

For example, regulators issued a document last week to regulate the "structured issuance" of the bond market. In December 13th, the Shanghai stock exchange and the Shenzhen Stock Exchange issued the notice on regulating the issuance of corporate bonds in the same period. It pointed out that issuers should not directly or indirectly subscribe to bonds issued by themselves, nor manipulate the pricing of issuers or black box operations. They should not seek illegitimate interests in the form of proxy or trust.

At the same time, for the underwriting institutions, the leading underwriters should make full verification of the related matters after the issuance of the Underwriters, and issue verification opinions in the underwriting summary report; the underwriting institutions and their affiliates involved in the subscription of their underwriting bonds should offer fair and procedural compliance, and establish a firewall between the issuing business and the investment trading business, so as to achieve an effective separation of business processes and personnel settings.

In response to the "vicious competition" of the super low underwriting fee that emerged during the year, the Securities Association of China issued a "evaluation method for the practicing ability of securities companies' corporate bonds (Trial Implementation)" in October 18th.

"Before a large brokerage company undertook a bid for underwriting of a 10 billion corporate bond, it offered an underpricing fee of as low as 10 thousand yuan. In order to do large-scale business, there are more and more examples of similar vicious competition. Regulators have also been making guidance and regulation this year, which is very necessary. A broker dealer in Beijing pointed out that

Judging from the new evaluation method of professional competence, the evaluation indicators for the practice ability of the securities company's bond business include five kinds of indicators, such as the basic guarantee ability of corporate bonds, the corporate bond business capability, the corporate bond compliance development capability, the corporate bond project risk control effectiveness and the service national strategic capability. The five indexes account for 20%, 30%, 20%, 20% and 10% of the overall score respectively. Corporate bond business capability is the highest proportion.

"A change of data can also see the focus of supervision. In the previous draft, the proportion of compliance industry capacity index and wind control effectiveness index is 30% and 10% respectively, but in the official manuscript published, these two indicators are 20% and 20% respectively, which also reflects the importance of regulation to the internal risk control ability of securities companies." The head of a medium-sized brokerage's bond business in Shanghai said.

In addition to the regulation of industry chaos, regulators are also trying to introduce innovative tools to enrich brokers' product lines.

For example, in expanding the financing channels of private enterprises and alleviating the financing difficulties of enterprises, the exchange has launched a pilot scheme for credit protection contracts, and has recently launched a pilot scheme for credit protection vouchers. According to the Shanghai Stock Exchange's disclosure, in December 17th, the first batch of credential protection certificates fell to 4 yuan, with a total principal amount of 133 million yuan, effectively supporting bond financing of 4 billion 460 million yuan.

It is understood that the first 4 single credit protection documents are created by Haitong Securities, CITIC construction investment, CITIC Securities and Huatai Securities, and 4 agencies provide credit protection for issuers through market-based credit enhancement tools, providing comprehensive financing solutions for enterprises to provide "bond financing + credit protection vouchers".