The 30% plunge was temporarily stopped!

Introduction: A number of “Net Belebrity” credit bonds have abnormally “dipped” one after another, and the net value of some bond funds has also fallen.

Since the beginning of this year, the bond market with a large number of defaults has been relatively rare, but since the end of October, Brilliance Auto, Shenyang Public, Yongmei Holdings and other defaults have triggered market attention and worries about credit bonds.

Origin丨21st Century Business Herald (ID: jjbd21)

Reporter丨Xin Jizhao, intern Lei Simin

Edited丨Lin Hong

Figure / Figure bug

A number of “net celebrity” credit bonds “dipped” abnormally one after another, and the net value of some bond funds also fell. November 12,

“16 Qingkong 02” issued by Tsinghua Holdings Co., Ltd. fell for 3 consecutive days, falling 27.14% on the same day to 43 yuan;

Yunnan Urban Investment “19 Cloud Investment 01” fell more than 17% at one time, and fell 12.12% to 87 yuan that day.

Pingdingshan Tian’an Coal “13 Ping Coal Bonds” fell for two consecutive days, falling 9.65% on the same day to 76.8 yuan;

Jizhong Energy “16 Jizhong 01” also fell continuously, falling 8.14% to 86.9 yuan.

In terms of bond-based wealth management, Huatai Zijin Fengyi Short-term Bond C fell continuously this week, and its net value fell to 0.9348 on Wednesday, down 9.61% from Monday.

Since the beginning of this year, the bond market with a large number of defaults has been relatively rare, but since the end of October, Brilliance Auto, Shenyang Public, Yongmei Holdings and other defaults have triggered market attention and worries about credit bonds.

“Internet celebrity bonds” abnormal diving

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“This wave of defaults are mainly local state-owned enterprises, but also’net celebrity’ state-owned enterprises.” On November 12, a brokerage and bond market investor said on November 12 that many bonds defaulted.

After one of Yongcheng Coal & Power’s bonds defaulted, many bonds fluctuated abnormally and transactions deviated from the average price.

On November 11, Yongcheng Coal and Electricity Holding Group Co., Ltd.’s 2020 third phase of ultra-short-term financing bonds (“20 Yongmei SCP003”) substantially defaulted. The default of Yongmei Holdings was without warning, and the company’s bond rating was as high as AAA. Twenty days before the default, Yongmei Holdings just issued 1 billion yuan “20 Yongmei MTN006”, and the funds raised this time have also been used to repay debt.

Henan Energy and Chemical Group, the parent company of Yongmei Holdings, is one of the largest state-owned enterprises in Henan. Its main body rating is also AAA, and the scale of duration bonds is huge; Yongmei Holdings’ default may trigger a cross default of its duration bonds. After the default of “20 Yongmei SCP003”, China Chengxin International has instantly lowered the credit ratings of the two companies from AAA to BB.

On November 12, Henan Energy and Chemical Group announced that its subsidiary Yongmei Holdings “20 Yongmei SCP003” defaulted because some of the existing debt financing instruments issued by the company in the national inter-bank bond market were set up with the issuer and its consolidation scope. The company failed to repay the investor’s cross-protection clauses for the principal and interest of debt financing instruments due and payable. The default of the above-mentioned ultra-short-term financing bills of Yongmei Holdings objectively triggered the cross-protection clauses. Investors are reminded of related risks.

On November 12, the 21st Century Business Herald reporters, according to the statistics of the Enterprise Warning Pass, showed that the transaction prices of many bonds including Yongmei Holdings and Ziguang Group deviated. For example, 4 transactions of “18 Yongmei MTN001” deviated from Thursday, and the price of a transaction at 16:05 deviated -53.0362 yuan.

After Yongmei Holdings defaulted, coal enterprise bonds suffered a sell-off.

Pingdingshan Tian’an Coal Industry’s “13 Ping Coal Bonds” fell for two consecutive days, falling 9.65% to 76.8 yuan on November 12, and Jizhong Energy’s “16 Jizhong 01” also fell continuously, falling 8.14% to 86.9 yuan on November 12.

In addition, “16 Qingkong 02”, “18 Ziguang 04”, “19 Ziguang 01” and “19 Ziguang 02” fell by about 30% and were temporarily suspended by the Shanghai Stock Exchange.

According to media reports, Long Dawei, chairman of Tsinghua Holdings, will enter the board of directors of Ziguang Group and work with Ziguang Group’s legal representative Zhao Weiguo to deal with Ziguang Group’s debt. On Tuesday, Ziguang Group also announced that Tsinghua Holdings announced to further strengthen the group’s corporate governance, optimize the board of directors and operating management mechanism, and introduce a dedicated work team to effectively promote school-enterprise reform, promote stable operations of the enterprise, and actively and steadily resolve operating risks. Realize the development of industrial strategy.

Prior to this, the 1 billion private placement bond “17 Huaqi 05” of Brilliance Automobile Group, a state-owned enterprise in Liaoning Province, expired on October 23, and Brilliance Automobile Group failed to pay as scheduled. As early as August of this year, several remaining bonds of Brilliance Automobile Group plummeted.

Maintain the order of default

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In fact, since the beginning of this year, the bond default situation has improved. The overall default rate and default scale in the first three quarters have improved compared with the previous two years.

However, since October, many state-owned enterprises and urban investment bonds have defaulted. These new default entities have been relatively large in size, and the default rate and default scale have increased rapidly.

The default of local state-owned enterprises and other bonds has a considerable impact on regional financing.

According to the statistics of Kaiyuan Securities, from 2014 to the end of October 2020, 175 issuers across the country triggered a total of more than 600 credit defaults, with a cumulative default amount of 560 billion yuan.

By region, Beijing, Guangdong, Shandong, Jiangsu and Liaoning have more cases of default;

According to the nature of the enterprise, private enterprises have a greater probability of default;

Classified by industry, the number of breaching entities in commerce, machinery and equipment, and chemicals is relatively large.

It said that once the default event pushes up the regional interest rate differential, it will take a long time for the regional interest rate differential to return to the original point, but these defaults will have little impact on the respective industry interest rate differential.

Zhang Xu, chief fixed-income analyst at Everbright Securities, said that compared with other financing methods, bond financing is more convenient, lower issuance costs, and fewer requirements for collateral. The above-mentioned characteristics of bond financing come from its historically low default rate and orderly defaults.

In fact, under the care of the competent authorities, the credit bond market has been operating in an orderly manner. However, in recent times, the default of individual AAA-level entities has disrupted the previous orderliness, and as a result has increased the overall financing cost and difficulty of the bond market, and reduced the quality and effectiveness of financial institutions in supporting the real economy.

Regarding sudden breach of contract, supervision has also taken action. After the 1 billion yuan-scale “20 Yongmei SCP003” materially defaulted, on November 12, the Interbank Market Traders Association announced that recently, the Association paid attention to Yongcheng Coal and Electricity Holding Group Co., Ltd. following October 20, 2020 Substantial breach of contract occurred quickly after the daily issuance of “20 Yongmei MTN006”; the association will initiate a self-discipline investigation on whether the issuer and related intermediaries effectively disclose risks and fully disclose in the course of business development, and whether they strictly perform related duties.

The NAFMII announced that during the investigation, if relevant institutions are found to have violated the self-discipline rules, NAFMII will impose strict self-discipline sanctions; if relevant institutions have illegal acts such as fraudulent issuance, false information disclosure, etc., NAFMII will hand over. Further processing by relevant departments.

Zhang Xu said that orderly default will help the market grow, and disorderly default will destroy the credit accumulated for more than ten years. Only when the order of defaults is maintained can it help strengthen market discipline and allow the Chinese bond market to develop more healthily.

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