AAA Credit Debt Explodes One After Another, Hitting The Market Strongly: Can Credit Risk Pricing Still Talk About "Faith"?

Yongcheng Coal and Power Holding Group Co., Ltd. (hereinafter referred to as "Yongcheng Coal Group") and other companies' credit risk is still fermenting.

On November 16, Henan Transportation Development Group announced that the "20 Yujiao mtn007" originally scheduled to be issued from November 16 to 17 was cancelled. The issue amount of the bonds is 1.8 billion yuan and the maturity is 3 years. The reason for the cancellation is that the market has fluctuated greatly recently. Henan transportation group said it would re issue the bonds at another time.

In addition to Yongmei Group, there are lithium giant Tianqi lithium (002466. SZ) and Ziguang group, a well-known school enterprise. The "giants" fell suddenly and continued to impact the market.

In fact, due to the recent credit risk events, the bond market has been greatly adjusted.

"If the government wants to support enterprises to go out of the trough, there is certainly no problem of debt evasion or cancellation," a bureau level official of a financial department in Henan Province told the 21st century economic report. The government will not support enterprises to evade or cancel their debts. This is not in line with the law of the market. It definitely does not mean that, but it will not help without principle. "

Yongcheng Coal Group Co., Ltd. (hereinafter referred to as the company's short-term interest payment) has been issued by the company's short-term securities (hereinafter referred to as sc0205) and the company's short-term interest payment has been completed.

"There have been a large number of recent credit risk events, especially some of which have exceeded market expectations, which have had a significant impact on market sentiment, and bond yields have risen to a certain extent." Zou Weina, the proposed fund manager of Yinhua Zhaoli, told the 21st century economic reporter.

Credit risk diffusion

Due to the improved financing environment brought about by the epidemic, the credit risk exposure in the first three quarters of this year has slowed down compared with the same period last year.

But this slowdown is being changed by the credit default that accelerated in the fourth quarter.

The leading role of this time, from the past private enterprises, quickly turned to state-owned enterprises, leading companies.

A stone stirs waves. As the last belief in the bond market, it is also being stripped away bit by bit.

According to the data, Yongmei Group had a credit rating of AAA before, the largest shareholder of the company was Henan Energy Chemical Group Co., Ltd., and the actual controller was the state owned assets supervision and Administration Commission of the people's Government of Henan Province.

"The market concern caused by recent credit risk events has exceeded the relevant issuers themselves, and has spread to worry about credit bonds of some industries, regions and even local state-owned enterprises with weak qualifications, which has a large impact." Zou Weina said.

In fact, at the same time of Yongmei Group's default, the credit bonds of the whole coal industry companies were affected, and the related companies in Henan Province were also deeply troubled. For example, Henan Communications and transportation development group, which announced the cancellation of the issuance on November 16, and Shanxi coal import and Export Group, Yankuang Group, Jinneng group, Yangquan coal industry group, etc., have cancelled the bond issuance before.

"Affected by investor sentiment tends to be cautious, the difficulty of financing in the primary market of credit bonds has increased, and the number of cancelled and postponed issuance has increased." A bond underwriter of a large securities firm in Beijing told the 21st century economic reporter.

"Last week's market can be called" debt disaster ". It is very difficult to issue successful bonds." The person said frankly.

On the other hand, market liquidity is also suffering. "Under the cautious mood, some market institutions have tightened the pledge financing standards, and some asset management products may encounter redemption, which aggravates the liquidity frictions and affects the prices of interest rate bonds and medium and high quality credit bonds." Zou Weina pointed out.

On November 16, the central bank launched a one-year MLF operation of 800 billion yuan, while the maturity of MLF in November was 600 billion yuan. It is pointed out that MLF has been extended for four consecutive months, which also reflects the central bank's intention to protect the liquidity of the banking system.

As a matter of fact, with the rise of capital interest rate last week, the central bank also increased the investment of funds in the open market. In particular, on Friday, when there was no funds due, the central bank put in 160 billion yuan of 7D reverse repurchase funds, keeping the liquidity of the banking system at a reasonable and sufficient level.

"As the market gradually digests the impact of events, the short-term market disturbance may have come to an end. Today, the interbank market has significantly improved, and the yield trend of interest rate bonds and good quality corporate bonds has generally stabilized." According to the above-mentioned institutions.

"Faith" is not a universal benchmark

"This market is basically unpopular this year. QQ groups that used to talk about high-yield bonds are no longer active, and suddenly become online celebrities again." A North China private equity firm bond fund manager said.

A fixed income analyst of a large securities firm also lamented, "the market is so interesting, judging the decline in risk appetite and the rise of credit spread, but it is really unexpected that this is the current pattern."

"Once the risk is further evolved without effective disposal, it is likely to return to the" one size fits all "in 2018 and 2019, and the damage to the market is also very great." It is pointed out by the above-mentioned institutions.

According to zhongchengxin data, considering that the maturity scale of credit bonds in the fourth quarter is still large, and the financing environment of the bond market will not be significantly relaxed, it is expected that the credit risk or marginal rise in the fourth quarter. According to the change trend of the net financing scale and maturity pressure of the credit bond market, it is expected that the default rate of the public offering market in the whole year will rise to about 0.7%.

When default is threatened, what will be the future credit risk pricing? Obviously, "faith" is no longer a universal benchmark.

"Recent events are not bad for the long-term development of China's bond market. Since the credit risk of the bond market began to enter the centralized release period in 2018, there has been a trend of market-oriented pricing of credit bonds. However, due to the asymmetric information, the belief of state-owned enterprises and the proliferation of AAA rating enterprises, some credit bond pricing is still unreasonable Zou Weina said, "after the recent events, investors' attention to credit risk is bound to increase significantly, and the credit research system may also change accordingly. Investors with blind credit sinking may tend to decrease, and future credit risk pricing is expected to be more market-oriented."

In its view, the expansion of credit spread is a long-term trend of the bond market, and this is not simply the spread expansion in the sense of external rating, but refers to the credit risk pricing will tend to be reasonable, and the credit spread will more reflect the difference of credit risk between different entities. The probability rate of recent credit risk events will further promote the expansion of real credit spread.