Debt Market Turn: Low Cost Financing Does Not Reply To The "Cancellation Of" Bonds.

The continued adjustment of the bond market has made the bull market atmosphere for several months change.

"Since May, the overall circulation of the bond market has obviously shrunk, and is expected to shrank by more than half." In June 17th, fan Wan Yuan, deputy general manager of fixed income financing headquarters of Shen Wan, told the business reporter in twenty-first Century.

Unlike the issue boom in previous months, many issuers on the market have tended to cancel the issue and avoid the adjustment point.

According to the twenty-first Century economic report reporter combing, this month, there are more than 20 bonds, such as "20 Lishui city construction SCP002" of Nanjing Lishui Urban Construction Group Co., Ltd., Liuzhou East Tong Investment and Development Co., Ltd., "20 Liuzhou water group MTN001" of Shui Fa group, and the announcement of cancellation of the issuance of MTN001.

According to the relevant company's statement, the cancellation of the issue is due to the recent increase in the issuing price of the market, so the adjustment of the capital utilization plan will be issued later.

On the one hand, the issuers want to lower the cost of financing. On the one hand, investors are seeking high coupon interest rates, and the two sides are playing a game.

Circulation tide

In twenty-first Century, according to the Wind data, 45 reports of non financial enterprises' credit debt were postponed or cancelled since June, and the planned scale of issuance was 33 billion 550 million yuan. In May, there were 55 credit bonds issued by non financial enterprises which were postponed or cancelled, and the total planned loans amounted to 42 billion 250 million yuan.

From the issuance data, the shrinkage is more obvious.

Wind data show that since June, only 10 billion 370 million yuan of corporate bonds have been issued in half a month, which is less than half of the 65 billion 410 million high in April. Corporate bonds issued 83 billion 315 million yuan, while the high point in March this year was 449 billion 370 million yuan; medium term bills and short-term financing bills were issued 59 billion 550 million yuan and 175 billion 770 million yuan respectively, compared with April 427 billion 260 million yuan and 629 billion 20 million yuan, the issuance data also shrank by ten. It is obvious.

Brokerage research data also show that since June, the net increment of credit debt is still less than 120 billion.

"There are two main reasons for the shrinking of the offering. On the one hand, the interest rate for the early issuance of bonds is very low for the highly rated bonds, but in May, the market came back sharply and the yield was generally upward. Therefore, many issues were cancelled or postponed. On the other hand, for the low rated bonds, such as the AA class, the market pullback, the yield further went up, the AA class bonds were even harder to sell. The combination of two factors has shrunk over 50% of the entire bond market. Fan said.

Judging from the market situation, the issue of postponed or cancelled bonds issued by the NPC is highly rated state-owned enterprises.

In twenty-first Century, according to the Wind data, according to the data compiled by the economist in twenty-first Century, a total of 42 credit bonds were issued to the central enterprises or local state-owned enterprises since June, which accounted for 93%. In addition, only 3 of them were issuers of non state owned enterprises, namely, two housing companies in Shimao, Jindi, and ping an international leasing, which belong to multiple financial sectors.

"A lot of high Rating firm debt rates continued to decline, even with 2% or even below 1% interest rate bonds, and now the market suddenly changes, issuers also want to avoid this period of time." A bond trader in Beijing said.

For example, this month announced the cancellation of the "20 business investment 01" issued by the issuer, the issuer of the new Lanzhou commercial and Trade Logistics Investment Group Co., Ltd. announced in a notice that the recent issuance of the bonds was decided to cancel the issuance of the current bonds because of the large fluctuation of market interest rates in the near future.

"Compared to previous financing, interest rates are also lower, the current issuance rate generally exceeds 50BP." The broker said.

Paradox is that unlike the issuers who want to reduce the cost of financing, the current market is still vigilant against the liquidity risk of credit bonds, and investors want higher coupon interest rates to cover the risk of uncertainty.

China Merchants Securities research pointed out that unlike the issuers' appeals, investors expect coupon interest rates to be faster and larger upward. First, the trend of the market is uncertain, and more premium is needed to cover risks. Two, high quality and high coupon varieties are easier to sell. But issuers do not want to satisfy investors' demands. Most investors can only wait and see passively.

According to its data, the current purchase mood (the difference between the subscription ceiling and the coupon) has cooled to the level of May last year, and in June it still failed to open a coupon for the lower limit.

Follow up or return smoothly

"It is expected that this situation will continue until the end of June, because the end of June is itself a time of relatively tight funds, and the market will rebound after July, and interest rates will fall somewhat." Fan said.

In its view, "this adjustment is mainly central action to combat market lending and financial arbitrage, short end market interest rates greatly improved. When the space of arbitrage is narrowed, the market will return to a more stable state. Because inflation itself is not very high, and economic growth figures are also not satisfactory.

Wind data show that since May, the T2009 contract of treasury bond futures has been cut by more than 2%, of which, in May, the T2009 contract decreased by 1.36%, and since June, the decline has reached 0.97%.

"Since late May, the market has basically tightened monetary policy around the central bank in trading. The yield has also been affected by this effect. In June 8th, the central bank pointed out in the open market announcement that the people's Bank of China had a one-off sequel to the medium-term credit facility which was due to expire this month on June 15th. The specific operating amount will be determined according to the market demand and so on, and its intention to maintain stability is obvious. Concerns about monetary policy shift have subsided. " The founder Fubon fund fixed income team pointed out.

For the subsequent market trend, Wei Fengchun, chief macroeconomic strategist at the time fund, said: "the economic recovery trend is affected by the domestic epidemic, and the policy focus has shifted to broad credit. In the context of vigilance against capital arbitrage, the central bank is more willing to use structural monetary policy tools to achieve directional, accurate and broad credit. At present, there is still no opportunity to see the trend of bonds. However, after a series of rapid adjustments, the momentum of the bond market will gradually ease with the external disturbances, supply side pressure relief, some economic data fluctuations, and the expected temperature rise. (Editor: Wu Yan Ling)

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