Credit bond asset allocation ballast loose

 Credit bond asset allocation ballast loose

On November 27, a fixed income fund manager in Shanghai said that the impact of credit debt default is not limited to the stampede debt base, which has touched the risk preference of the whole industry.

Ten billion yuan of short-lived debt

Before the impact of credit default, the impact of seesaw has been highlighted. In the background of equity fund issuance continues to be hot, the bond base has been ignored by investors. According to the official website of the China Association for basic fund management, the scale of the debt base at the end of the third quarter of this year was about 2.68 trillion yuan, down 13.93% from the end of the previous quarter.

As a matter of fact, the debt base has been declining for half a year. Since the end of May, its share has been decreasing, from 3.07 trillion at that time to 2.4 trillion at the end of October. A senior researcher in the industry explained to the times weekly that it might be related to the continuous rise in the yield of treasury bond futures during the period.

Part of the debt base recently issued a large redemption announcement. According to Yingda fund, the class A shares of Yingda an Huichun debt base were heavily redeemed on November 18; Jiutai fund also said that the 3-month fixed issue bonds of Jiutai Jiujia pure bonds were redeemed in large amount on November 23.

Yingda an Huichun debt base is a 10 billion scale Fund issued at the beginning of the year. After this huge redemption, it may be difficult to restore its former glory. According to the fund interim report, 99.99% of the fund holders are institutional investors, with obvious institutional customization nature. Similar to Yingda Anhui, Jiutai Jiujia pure bond is also the second new fund established this year.

The bond base of uninvested credit bonds has also been redeemed. In view of this phenomenon, Zhixin research institute points out that, on the one hand, it reflects that investors tend to be cautious about the investment in the bond market; on the other hand, it also reflects that investors have a certain degree of misunderstanding about the operation of the bond market and bond funds.

According to incomplete statistics, since November, 15 debt bases have successively issued liquidation announcements. Since the beginning of this year, 72 debt bases have been wound up, far more than 43 in the same period last year.

Of course, most of the people who have stepped on the debt liquidation in November are not short of fierce competition, and those who have stepped on the scale of debt liquidation in November are obviously not short of fierce competition.

The impact of the Yongcheng Coal incident highlights

At present, the default event of Yongmei has come to an end temporarily, but its impact is not limited to bondholders. Without significant changes in their own fundamentals, Pingmei, Jizhong energy, Yuncheng investment, Haiguo Xintai, Baotou Steel, Ziguang and other local state-owned enterprise bonds were sold off in the market, resulting in a substantial discount transaction. The net value of some debt bases declined and was redeemed by investors. According to the Research Report of Bank of Nanjing, the ultra short-term financing default of Yongmei Group was beyond the expectation of the market, causing pessimism in the credit bond market and a series of chain reactions.

Societe Generale Securities research also pointed out that the market believed that the default of brilliance group and Yongmei Group was suspected of malicious debt evasion and worried that such default would become a model for local state-owned enterprises to follow, which would impact the pricing logic of credit bond market based on credit fundamentals.

In addition, since the beginning of November, five new funds have failed to issue, of which three are bond based or partial bond hybrid funds. On November 24, Guodu securities issued a notice saying that its Guodu aggregate hybrid failed to issue because the raised funds did not meet the standard. In fact, of the 21 funds that failed this year, 11 were pure bond funds.

Credit debt crisis or sustained

The impact of default events on the credit bond market is often reflected in the chain reaction of the face value of the default bonds falls sharply, the bond base is redeemed, the bonds are sold off, the net value of the debt base falls and the debt base is redeemed.

Looking back on several landmark credit default events in history, the net redemption of debt base may exceed 100 billion yuan in 2016 China Railway Materials event. However, in the outsourcing event in 2019, the pressure on debt base redemption is limited, but the total amount of Bond Custody (CBRC + SSE) in June 2019 decreased by RMB 236.1 billion.

China Merchants Securities Research Report points out that if the outsourcing products are redeemed at the end of the year, the scene at the end of 2016 may reappear. In the short term, if the bond market overshoot continues to deduce, the debt base redemption probability will inevitably rise.

As of now, there is no final conclusion on when this round of credit default will end. Recently, according to the Research Report of GF Securities, the historical data from 2015 to 2019 show that the improvement of the default rate of credit bonds lags behind the improvement of economic prosperity. For example, the economic growth index in the second half of 2015 began to rebound, but the default rate of credit bonds did not decline until the second half of 2016.

In the research report, Societe Generale Securities also pointed out that, in the new round of credit expansion, the markets re pricing of the credit risk of state-owned enterprises and central enterprises did not end. According to historical experience, the impact of credit default on the market lasts for 1-2 months, which may mean that the evolution of credit risk impact is still the main theme of the market in the short term.

Guotai Junan Securities research paper said that on November 22, the financial commission made a high-level statement to strictly grasp the evasion and cancellation of debt to boost market confidence. By adding the successful extension of Yongcheng Coal short-term financing and the cashing of Jizhong energy bonds, it can be judged that the short-term liquidity shock has come to an end.

According to Great Wall Securities statistics, since the beginning of the year, there have been 29 cases involving central enterprises, 44 cases of local state-owned enterprises, 92 cases of private enterprises and 8 cases of Sino foreign joint ventures. On the whole, private enterprises still default more, but AAA level default mainly concentrated in the central state-owned enterprises and local state-owned enterprises, which is relatively rare in the past credit default tide.

In this regard, Ping An Securities analyst Zhong Zhengsheng believes that at present, the bond market sentiment is relatively fragile. In the future, we need to pay attention to the cross default of Jizhong energy and Henan Coal Chemical Co., Ltd., as well as the negative feedback of debt base redemption and net value decline, as well as the risk of structural financing explosion.