Yan Ying, reporter from China Fund Daily
Since the beginning of this year, the equity financing of listed securities companies has soared, and there are many kinds of fixed increase and allotment, but the popularity of bond issuance to “replenish blood” remains unabated.
A few days ago, Haitong Securities was approved for a small public offering of 60 billion yuan, which attracted industry attention. Prior to this, Guotai Junan and Huatai Securities also received a corporate bond quota of 60 billion yuan, and the leading securities companies still have advantages in the field of bond financing. Wind data shows that since the beginning of this year, the total issuance of securities company bonds is 463.465 billion yuan, and the number of issuance is 238. It is expected to exceed the 500 billion yuan mark in the first half of the year.
As a capital-intensive industry, securities companies need to supplement working capital throughout. In the low range of financing costs, securities companies that choose to issue bonds will also be more active. Oriental Fortune pointed out that the recent 3-year spread of yield to maturity of ChinaBond Securities has dropped significantly, which is good for securities companies to increase the rhythm of bond issuance and financing.
Haitong’s 60 billion small public offering approved
A few days ago, Haitong Securities announced that it received the CSRC’s “Approval for the Registration of Haitong Securities Co., Ltd.’s Public Issuance of Corporate Bonds to Professional Investors”, agreeing to issue corporate bonds with a face value of no more than 60 billion yuan. The approval is valid for 24 months, and Haitong Securities can issue bonds in installments.
In terms of the use of funds, the raised funds of Haitong Securities bonds this time, after deducting the issuance costs, plan to use no less than 40 billion yuan of raised funds to repay mature or re-sold corporate bonds. According to the prospectus, from June 2022 to August 2024, Haitong Securities will have 78.31 billion yuan of bonds due or sold back.
For the remaining funds raised, Haitong Securities stated that it will be used for working capital required for daily production and operation such as capital intermediary business. Haitong Securities said that securities companies with strong wealth management, institutional services, and capital intermediary capabilities, with a sound international layout, stronger technology empowerment, and excellent corporate culture will have stronger market competitiveness. In order to implement the goal of strategic coordinated development, the development of related businesses faces a large demand for funds.
“The issuance of this bond will optimize the company’s debt maturity structure to a certain extent, further enhance the company’s short-term solvency, provide stable medium and long-term financial support for the company’s business development, and help improve the company’s profitability and core competitiveness.” Haitong Securities said.
In January of this year, both Guotai Junan and Huatai Securities were approved for 60 billion yuan in corporate bonds. Before that, CITIC Securities had been approved for 80 billion yuan of corporate bonds in 2021, leading the industry. In addition, the Shanghai Stock Exchange’s corporate bond project information platform shows that Guotai Junan still has a small public offering of 10 billion yuan to submit for registration.
Since 2019, the yield-to-maturity curve of ChinaBond Securities has shown an obvious downward trend, and leading securities companies have driven the bond issuance boom in the industry. Superimposed on the downward trend of financing costs this year, medium-sized securities companies also show certain late-mover advantages.
According to data from the Shanghai Stock Exchange, since the beginning of this year, Dongxing Securities, Orient Securities, China Merchants Securities, Guoyuan Securities, Guolian Securities and many other securities companies have been approved for small public offering projects of more than 10 billion yuan. Among the unlisted securities firms, on June 2, the registration of CICC Wealth’s 15 billion yuan small public offering took effect. Prior to this, from February to March this year, Ping An Securities and Essence Securities were approved for public offerings of RMB 30 billion and RMB 20 billion respectively.
During the year, securities companies issued more than 460 billion yuan in bonds
As a capital-intensive industry, securities companies need to supplement working capital throughout. In recent years, while increasing the development of asset-light business, securities companies have not forgotten to increase the asset-heavy field through various debt financing tools.
Wind data shows that since the beginning of this year, the total issuance of bonds (corporate bonds and short-term financing bills) by securities companies is 463.465 billion yuan, and the number of issuance is 238, of which 154 are corporate bonds and 84 are short-term financing bills.
From the perspective of monthly issuance, the issuance of securities company bonds reached a small peak in March this year, with a total issuance of 104.225 billion yuan and 62 issuances. According to industry insiders, this is related to the fact that various securities companies have previously issued bonds since March and entered the peak period of repayment. Since the scale of bond issuance from April to May has not kept up, the follow-up bond issuance by securities companies to “replenish blood” may speed up.
Judging from the coupon rate of bonds issued by securities companies since June, the issuance rate range is concentrated in the range of 2.1%-3.0%, and the issuance rate of individual bonds is as low as 1.88%. Oriental Fortune pointed out that the recent decline in the 3-year interest rate spread of ChinaBond Securities Company’s yield to maturity is favorable for securities companies to increase the rhythm of bond issuance and financing, and strive to obtain better comprehensive financing costs.
According to regulatory regulations, when the cumulative new borrowings in the current year exceed 20% of the net assets at the end of the previous year, the issuer shall promptly announce the major event. Recently, small and medium-sized listed securities companies such as Changjiang Securities, Shanxi Securities, and Western Securities have successively issued announcements stating that the cumulative new borrowings for the year have exceeded 40% (or 20%) of the net assets at the end of the previous year. However, the above-mentioned companies all said that the current financial situation is healthy, and all debts are repaid on time.
For example, Changjiang Securities said that as of May 31, the company’s cumulative new borrowings accounted for 28.07% of its net assets at the end of the previous year, mainly due to the increase in the issuance of new corporate bonds, subordinated bonds and inter-bank lending; Western Securities’ cumulative new borrowings It exceeded 40% of the proportion of net assets at the end of the previous year, and the balance of corporate bonds increased by 10.382 billion yuan compared with the end of 2021, which was also caused by the issuance of corporate bonds and short-term securities lending.
A business person from a leading securities company in Beijing told reporters that in recent years, many regulatory policies have required securities companies to improve their own capital strength. For example, the “Regulations on the Classification and Supervision of Securities Companies” revised in 2020 stipulates, “Securities companies with a risk coverage ratio of 130% and a net capital of more than 15 billion yuan and a risk coverage ratio of 130% during the evaluation period will receive 2 points and 1 point respectively. “. Securities companies’ demand for capital will continue to increase, and a considerable part of them will be issued in the form of bonds.
Edit: Captain
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