Every risk event will prompt the market to reshape the risk pricing system. The consensus in the industry is that this default will make the market switch from recognizing institutions and looking at licenses to a market-oriented mechanism that comprehensively considers the quality of collateral and the credit of counterparties. This means that the credit spread between different rating agencies will continue to expand, and the financing cost of low rating entities will further increase.
Large scale cancellation of credit bonds
On November 10, the default of 20 Yongmei scp003 bonds caused a series of chain reactions. On the same day, issuers successively stopped the issuance of bonds. For example, 20 Linfen 06 announced on the 10th that due to the great fluctuation of the bond market in recent years, in order to reasonably reduce the issuing interest rate and control the financing cost of the company, the issuer, the lead underwriter, lawyers and investors have reached a consensus and decided to issue the bonds on a selective basis. The specific issuance time will be determined separately.
By November 13, the scale of cancellation reached its peak. According to the reporters statistics, 9.55 billion yuan of bonds were cancelled or postponed on that day, which was significantly higher than the sum of the cancellation scales in the first nine trading days of November. On the 16th and 18th of the following day, due to the overall poor market investment sentiment, the cancellation of bond issuance intensified. From November 10 to 19, a total of 39.88 billion yuan of bonds were cancelled.
After this round of credit default, we are all waiting and waiting. Local state-owned enterprises with general qualifications need to rely on banks, and the access and price requirements of non-bank have generally been increased. The aforementioned Shanghai Securities Underwriter told reporters, for example, before you can see the AA + rating, the conditions rise to AAA.
A person from the investment bank department of a securities firm in Beijing also told China first finance and economics that the current market investment sentiment is relatively cautious, coupled with the rapid rise in valuation, some issuers have not adjusted their expectations, and the primary issuance range given is too low, which also leads to the failure of the issuance.
Comparing the bonds that have been cancelled, we can find that most of them are local state-owned enterprises, and most of them are industrial bonds and urban investment bonds with weak qualifications. A Beijing securities firms investment banking department told reporters that the default of Yongcheng Coal bonds has aroused investors concern about the surplus industry enterprises. Among them, it is difficult to issue credit bonds for the main body with weak qualifications, especially those close to the default bond industry and located in the same region.
For example, Henan Communications and Transportation Development Group Co., Ltd., which is from the same region as Yongmei holdings, cancelled the issuance of the first phase of 1.8 billion medium-term note 20 Jinneng mtn007; the same coal leader Shanmei group cancelled the issuance of a short-term financing 20 Shanmei cp005; and Jinneng group cancelled the issuance of a 500 million yuan medium-term note 20 Jinneng mtn019.
What is more affected is the areas where the default is concentrated, such as northeast, Henan, and regions where there have been risk enterprises before, including Hebei; in contrast, Guangdong and Zhejiang will be smaller in areas with relatively strong overall financial resources. The rating director of a rating company in Beijing told reporters.
In order to appease the market sentiment, recently, Wang Yixin, vice governor of Shanxi Province, who issued bonds for Shanxi coal enterprises in 2016, once again made a series of statements at the special meeting of Shanxi provincial state-owned enterprises and financial institutions held on November 18, saying that the stock debts of provincial state-owned enterprises, no matter how the asset ownership changes among the provincial state-owned enterprises, guarantee the credit of financial institutions The certificate is not reduced.
Earlier, on November 14, the state-owned capital operation of Shanxi Province pointed out in a letter to creditors of Shanxi provincial enterprises that it would continue to strengthen the prevention and control of debt risk of provincial state-owned enterprises, achieve early warning 15 days in advance, and mobilize the provincial state-owned enterprises to form a joint force to form a strong capital pool. Under the strong coordination of Shanxi state-owned assets operation company, Shanxi state-owned enterprises have sufficient strength, To ensure that there is no default on maturing bonds.
Although there are some places to express their opinions, but the market sentiment has not improved significantly. Recently, Shanxis speech only stopped selling, but still did not buy. Said a Beijing securities firm investment banking department.
At present, in the view of many industry insiders, the default of AAA grade enterprises represented by Yongcheng Coal bonds has intensified investors concerns about weak qualification state-owned enterprises in Henan and other provinces, especially coal enterprises and energy enterprises with heavy debt burden and high pressure on centralized maturity of bonds, such as Yuneng chemical, Jizhong and Pingmei.
Mingming, deputy director of CITIC Securities Research Institute, also said that at present, the market still has expectations for central enterprises (except for enterprises such as schools and enterprises) and urban investment varieties, but the belief of state-owned enterprises has been shaken. Under the background of poor fundamentals, short-term bond issuance and uncertain local government support, some zombie SOEs risks may have returned.
The cost of issuing bonds of some enterprises increased significantly
Now the benchmark interest rate and credit spread are rising, and the overall issuance rate is going up. The securities underwriter in Shanghai said to the first financial reporter.
This is directly reflected in the relevant data. Wind data shows that since November, the issuing interest rate of corporate bonds has gradually increased. In the first week (November 2-8), the coupon rate was only 3.6843%, but in the second week (November 9-15), the issuing interest rate rose to 4.3142%. In the third week (from November 16 to the present), the issuing bank interest rate exceeded 5%, to 5.4129%.
In addition, among the bonds being issued, the coupon rate of 16 bonds is above 4%. Among them, the coupon rate of 20 Liujian 05 issued by Guangxi Liuzhou Construction Investment and Development Co., Ltd. is as high as 7.3%; that of 20 Jinhui 03 issued by Jinhui Group Co., Ltd. and 20 liantai 01 issued by Guangdong liantai Group Co., Ltd 95% and 6. 5% respectively.
In fact, the market is not surprised by the high financing costs of some enterprises. After all, every risk event will prompt the market to reshape the risk pricing system. Wang Yifeng, chief financial analyst of Everbright Securities Research Institute, analyzes that the default of Yongmeis credit bonds has further impacted the markets belief in state-owned enterprises. When credit bonds are no longer faith bonds, liquidity and credit stratification will further evolve.
Although the default rate of Chinese enterprises is relatively low at present, with the gradual exposure of weak credit risk of state-owned enterprises, the credit bonds of state-owned enterprises may be repricing, and the current low credit spread protection is insufficient, and the credit spread of state-owned enterprises may be divided. There are people in the industry to speak up.
According to the statistics of CITIC Securities, from the beginning of 2020 to now, the interest rate differential of central enterprises and state-owned enterprises has decreased by 24% and 22% respectively, to 23% and 5%, and the absolute value is 58bp and 72bp respectively, so the spread protection is quite limited. Considering the fundamental conditions of state-owned enterprises, the implicit government support is generally not as good as that of central enterprises, and the market may have revealed over optimistic expectations for the mining of state-owned enterprises. In the future, the consensus in the industry is that the credit bond market will continue to experience valuation restructuring. According to the analysis of Guotai Junans fixed income team, under the impact of state-owned enterprise belief, the market is more cautious about the sinking of qualifications, and the credit risk premium and liquidity premium of weak qualification subjects may expand, while the high-quality and stable entities will be more sought after, and the situation of credit stratification may be more obvious. In the long run, it is an inevitable trend to constantly break the belief of Gangyu. At the same time, Guotai Junan also said that under the background of the impact on the state-owned enterprise plate, the mining cost-effectiveness of the marginal urban investment and real estate plate is improving, but the tail body of these two plates also does not recommend more sinking. Source of this article: Guo Chenqi, editor in charge of first finance and Economics_ NBJ9931
According to the statistics of CITIC Securities, from the beginning of 2020 to now, the interest rate differential of central enterprises and state-owned enterprises has decreased by 24% and 22% respectively, to 23% and 5%, and the absolute value is 58bp and 72bp respectively, so the spread protection is quite limited. Considering the fundamental conditions of state-owned enterprises, the implicit government support is generally not as good as that of central enterprises, and the market may have revealed over optimistic expectations for the mining of state-owned enterprises.
At the same time, Guotai Junan also said that under the background of the impact on the state-owned enterprise plate, the mining cost-effectiveness of the marginal urban investment and real estate plate is improving, but the tail body of these two plates also does not recommend more sinking.