Short Term Corporate Bonds Pilot Landing Many Enterprises "Early Fresh" Broker Will Welcome The Bonus Period?

The Shanghai and Shenzhen Stock Exchange launched the pilot issue of short-term corporate bonds less than a week ago, and many companies responded quickly, and successfully promoted the short-term landing of public offering bonds.

In twenty-first Century, the economic report reporters learned that the first short term corporate debt issued by the pilot notice was issued by Henan investment group in 2020, and the first issue was issued in May 25th. The main underwriter is Ping An Securities and CITIC. The total issue is 500 million yuan, with a period of 180 days, a coupon rate of 1.79% and a full court subscription of 2.98, which will be used to repay loans from financial institutions.

In addition, the Shenzhen short term corporate debt - "safe real estate limited in 2020 for professional investors publicly issued short-term corporate bonds (phase I)" is also in the process of issuing, the planned size of the issue is 500 million, the duration is 180 days. It is understood that after deducting the issuance cost, the proceeds will be used to repay the debts of the company. The main underwriters include Guotai Junan, Haitong Securities, Ping An Securities, China Merchants Securities, CICC, CITIC, and CITIC Securities.

This is just the corner of the current public offering short-term corporate debt pilot.

Since May 21st, the Shanghai Stock Exchange issued the notice on the issues related to the pilot issue of public issuance of short-term corporate bonds (hereinafter referred to as the "notice"), allowing eligible issuers to issue short-term corporate bonds for professional investors within a period of 1 years in the pilot period.

Although there are market participants who question its "higher threshold", its significance should not be underestimated. In the eyes of many people in the industry, the notice fills gaps in the short term financing of the exchange bond market, broadens the financing channels for enterprises, reduces financing costs, and will also enhance the performance of securities brokerage businesses.

Short term corporate bonds fill gaps in the short term financing of the exchange bond market, broaden the financing channels for enterprises, and reduce financing costs. Visual China

Pilot landing

In recent years, with the growing scale of enterprises, market demand for short-term liquidity is also growing.

From the perspective of financing convenience and interest, the short fuse family in the interbank market exchange association system has been favored by many enterprises. According to wind data, 3516 short term financing bonds (including ultra short Finance) were issued in 2019, the amount of issuance was as high as 3 trillion and 630 billion yuan, while the issuance scale of corporate bonds was only 2 trillion and 540 billion during the same period, including 1 trillion and 460 billion of private debt and 1 trillion and 90 billion of general corporate bonds.

In May 21st, the Shanghai and Shenzhen Stock Exchange issued a notice to release short-term corporate bonds to fill gaps in the exchange market without public offering of short term varieties. But in twenty-first Century, the business reporter noted that because the demand for issuers is higher than the threshold of dealers association, insiders predict that the product will have limited or limited impact on the market.

According to the notice, short-term corporate debt is only for public investors, and the issuer's net operating average cash flow in recent three years is positive or at the end of last year, the quick ratio is more than 1, which is a restriction to some of the main assets in the heavy asset industry or poor cash flow.

Taking the A-share market as an example, according to the data of Dong Cai Choice, there are 3135 enterprises in the non-financial sector that meet the net cash flow generated by the average operating activities in 2017 -2019, which satisfy 2351 enterprises in the end of 2019. The total number of listed companies satisfying the conditions is 3443, accounting for 92% of the total number of non-financial enterprises. The total number of Listed Companies in the A share market is 2351.

However, there is a big gap between the industry and the industry. According to the data of Anxin securities, A, listed companies in real estate, building decoration, agriculture, forestry, animal husbandry and fishery have 31.8%, 18.5%, 14.8% of the main body do not meet the requirements.

It is worth mentioning that, according to Anxin securities data, the current issuance of short-term corporate bonds, building decoration, integrated and commercial trade accounted for 39.7%, 21.2% and 11.3% respectively. These short-term corporate bonds are mainly based on one-year period.

In addition, the notice also stressed that the use of short term corporate bonds should be reasonably matched with the duration of the bonds, and that the raised funds should be limited to repay debts and supplementary working capital that are due within one year and should not be used for long-term investment needs. The issuer shall disclose the specific purpose of the fund-raising funds in the prospectus and explain the financing needs reasonably. To supplement the working capital, we need to calculate the liquidity gap in the application document and provide the basis for it.

"The pilot subjects are limited and the form is of greater significance. The release of short-term corporate bonds has broadened the financing channels for enterprises, but it is more formal. The demand for public offering of short-term corporate bonds is much higher than that of the association of dealers. The short term financing bonds and ultra short term financing bonds are still the main reasons for issuing short-term public bonds in the short run. Guo Jin securities fixed income research team pointed out.

Securities companies or benefit?

At present, public offering short-term corporate debt is still in its infancy, and it is difficult to judge subsequent development. However, many market participants have pointed out that it has played a positive role in the performance of commercial banks.

"Corporate debt has always been an important part of investment banking and is one of the main sources of earnings. This time, the Shanghai Stock Exchange launches short-term corporate bonds, which is expected to further enlarge the scale of corporate bonds and provide more business opportunities to brokerages. The release of short-term corporate bonds has enabled securities companies to cut into short-term financing areas, giving brokerages more opportunities to compete with banks in the short fuse business, and have a good incentive for business performance. He Nanye, special researcher of Suning Financial Research Institute, pointed out to reporters in twenty-first Century economic report.

"A portion of the cake of the dealers association will be thickened, which will really increase the income of the brokerages," a Shenzhen intermediate brokerage firm also said to reporters.

However, the firm admitted to reporters that at present, customers are not too interested in the business. "Generally speaking, private short-term corporate bonds have been liberalized before, and the threshold of public offering is not low, so there is actually not so much."

In this view, the impact of short term corporate bonds on securities companies is more about the transformation of stock business and the original cake.

Another medium-sized broker dealer in Southern China also said: "we feel that the impact is not big. It is certainly a lot of business for investment banks, especially for the firm, but many of its large brokerages are interbank participants. In essence, when issuing bonds now, good targets do not make money, they are all the amount of money to be taken. Profits must also rely on some special products, and the competition is too fierce.

It is worth mentioning that at present, the interbank market is clearing up the chaos of ultra short underwriting. Insiders pointed out that without the introduction of a matching mechanism, the principal underwriters of public short-term corporate bonds are not subject to the Convention of self-discipline, which creates more competition for securities companies to participate in short-term corporate bonds.

But the investment bankers hint: "although there is a possibility, the issuer should also take into account the higher demand of the exchange's letter." As a matter of fact, the stock market is really short of the short term product now, just like a central bank ticket, and the exchange also needs to replenish the product line. "

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