On December 15, 2023, Shunde Rural Commercial Bank's first indefinite term capital bond (hereinafter referred to as "perpetual bond") was successfully issued, with an issuance scale of 2 billion yuan and a coupon rate of 353%, with a tenor of 5+n years, and a full-time multiple of 358 times.
The issuance of this issue of perpetual bonds has attracted wide attention from the market, attracting more than 60 financial institutions to actively subscribe, including joint-stock banks, urban commercial and rural commercial banks, securities firms, wealth management companies, **, etc. It is reported that the coupon rate of this bond is the lowest issuance rate of the same variety and rating of bonds during the year, and it is also the lowest issuance interest rate of perpetual bonds of rural commercial institutions in history, which fully shows that the market and institutional investors highly recognize the good operation and credit qualification of Shunde Rural Commercial Bank.
The issuer of the perpetual bonds, Shunde Rural Commercial Bank, has a history of 71 years and is the largest corporate financial institution in Foshan. Over the years, the core business indicators of Shunde Rural Commercial Bank have continued to develop steadily, focusing on the idea of first-class economic development, and always practicing the common development of enterprises and society, providing strong support for regional economic development, actively serving the real economy, and reflecting its active responsibility as a financial institution.
What is a perpetual bond?
The indefinite term capital bonds issued by Shunde Rural Commercial Bank, also known as perpetual bonds, refer to the bonds issued by the issuer in the inter-bank bond market with "no fixed term and containing the issuer's right of redemption".
Perpetual bonds usually have the characteristics of long maturity, additional issuer redemption rights, high coupon rates, interest rate adjustment mechanisms and mixed attributes of stocks and bonds, so they have been loved by the market since their inception. Perpetual bonds are a tool commonly used by international commercial banks to supplement other tier 1 capital, and there is a relatively mature model.
For bank issuers, perpetual bonds can not only supplement other tier 1 capital and enhance risk resilience, but also optimize capital structure and enhance credit provision. For investors, the credit risk of bank perpetual bonds is controllable, and the yield is high, and their investment value is recognized by the market.
Wen Bin, chief researcher of China Minsheng Bank, said that perpetual bonds are included in equity, which can reduce the bank's asset-liability ratio, improve the capital structure and adjust financial leverage.
At present, the total capital of commercial banks includes core Tier 1 capital, other Tier 1 capital and Tier 2 capital. To a certain extent, the issuance of perpetual bonds solves the problems faced by commercial banks in other industries with weak Tier 1 capital, which is of great significance for optimizing the capital structure of banks.
In the international capital market, perpetual bonds are relatively mature financial products. The issuance and investment of perpetual bonds in China have also pressed the acceleration button.
As of December 4, 2023, wind data shows that since the fourth quarter, the total scale of "two permanent bonds" issued by commercial banks has reached 3,881900 million yuan, of which the total issuance scale of secondary capital bonds is 3037900 million yuan, and the total amount of perpetual bonds is 84.4 billion yuan. Compared with the same period last year, the scale of issuance of "two permanent bonds" by commercial banks increased by 1,479500 million yuan, an increase of 6158%。
Industry experts said that since the launch of perpetual bonds by commercial banks, issuers have become more abundant in asset strength, and their ability to resist risks and issue credit has been significantly enhanced.
As an important channel for capital allocation and capital management, perpetual bonds still have a lot of room for development in the future.
The source of living water comes.
In addition to the perpetual bonds issued this time, Shunde Rural Commercial Bank has always maintained great attention and investment in helping private enterprises and activating the local economy.
According to the relevant person in charge of Shunde Rural Commercial Bank, since the issuance of the first financial bond in 2019, Shunde Rural Commercial Bank has issued a total of 9 financial bonds, covering entrepreneurial and entrepreneurial financial bonds, green financial bonds, small and micro financial bonds, secondary capital bonds and perpetual bonds. It fully reflects the bank's determination to provide targeted support to the real economy and enhance its own operational anti-risk capabilities. In addition, the previous issuance interest rates and subscription multiples are better, which shows that market investment institutions continue to highly recognize and invest in it.
In addition to supporting the real economy through its own bond issuance, Shunde Rural Commercial Bank also actively assists non-financial enterprises in issuing bonds. As the lead or joint lead underwriter, the bank has issued a total of 66 debt financing instruments for private enterprises in Guangdong Province in the interbank bond market, with a total issuance scale of 260 as of the end of December 20237.9 billion yuan, accounting for 76 percent of the bank's cumulative main bond issuance53%。
At the same time, Shunde Rural Commercial Bank is committed to achieving a "zero breakthrough" in bond issuance channels for technology-based private enterprises in combination with the industry characteristics of the local manufacturing industry with large scale and active private economy. For example, it has successively completed the first bond issuance in the interbank bond market for local private enterprises such as Wanhe Group, Dongling Group, Infore Group, and Keshun Waterproof.
Shunde Rural Commercial Bank has also played a combination of measures to help the local economy.
Combined with the current situation of the local industry in Shunde, Shunde Rural Commercial Bank gives full play to the advantages of local legal entities, focuses on local manufacturing enterprises, and provides manufacturing enterprises with a comprehensive financial service plan of "four specializations" of "franchise institution, professional team, special mechanism, exclusive products, and technology customization".
Shunde Rural Commercial Bank has set up manufacturing franchise centers in 17 branches, and built an agile organizational system of "cross-departmental head office + wide coverage of sub-branches" to quickly respond to the financial needs of manufacturing enterprises.
Specifically, it has set up a professional service team in the franchise organization to serve manufacturing enterprises. Introduced, focusing on supporting the business of manufacturing enterprises. Create an exclusive product and service package for the manufacturing industry, focusing on solving the various financial needs and pain points existing in the operation process of manufacturing enterprises. Focusing on the scientific and technological support of local scenarios, we will create a pragmatic and efficient "intelligent manufacturing +" series of digital service solutions for the manufacturing industry to accelerate the transformation and upgrading of manufacturing enterprises.
On September 7, 2023, the Science and Technology Innovation Financial Center of Shunde Rural Commercial Bank was officially inaugurated, which is the first science and technology innovation financial center established by a bank in the region. After the opening of the center, it will continue to expand the scope of science and technology innovation financial services, enrich science and technology innovation financial products, and provide higher level of financial services for science and technology enterprises.
Finance is the lifeblood of the modern economy, and the development of the local economy is inseparable from the support of finance. The source of living water is strong and inexhaustible, and the local economy will also take advantage of the momentum to take off.
It's time for the private sector to take off.
From a macro point of view, affected by the accelerated transformation of the domestic economic structure, China's post-epidemic recovery process has shown a situation of "wave-like development and zigzag progress", and the private economy has an urgent need for all-round policy support, including high-quality financial services.
On November 27, 2023, the People's Bank of China** news, the People's Bank of China, the State Administration of Financial Regulation, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Finance, the All-China Federation of Industry and Commerce and other eight departments jointly issued the Notice on Strengthening Financial Support Measures to Help the Development and Growth of the Private Economy (hereinafter referred to as the "Notice"), proposing 25 specific measures to support the private economy.
From a micro point of view, the "Notice" will strengthen support in multiple dimensions, and this round of policy support for private enterprises is at the right time. It is worth noting that the "Notice" mentions that the expansion of financing channels for private enterprises is the main starting point, and provides all-round financing support for private enterprises from three financing channels: loans, bonds and equity, which will help further optimize the allocation of financial resources for private enterprises and the private economy and promote the development and growth of the private economy.
Local banks, on the other hand, have become a necessary "pool of spring water" for the development of the local private economy because of their insight into the local area and flexible methods.
It is the proper duty of local banks to use policy support, innovate service models, continuously increase financial support, help enterprises cultivate endogenous power, and inject an inexhaustible stream of financial power into the development of small and micro enterprises and the private economy. Adhering to the responsibility of serving local economic development, serving private small and micro enterprises and serving the origin of the real economy is also the only way for the development of local banks.
With distinctive characteristics and the main positioning of serving small, medium and micro enterprises and private enterprises, Shunde Rural Commercial Bank has comprehensively promoted strategic transformation, and formulated four core strategies of leapfrogging the development of large retail, building a professional and characteristic corporate bank, realizing the three major centers of the financial market and big data to boost digital transformation.
In recent years, Shunde Rural Commercial Bank has made every effort to promote the construction of a digital ecological bank, stimulate value creation capabilities, focus on customers, implement list-based management of local high-quality enterprises, and continuously improve the coverage of financial services by providing special product solutions.
The private economy is a new force in promoting Chinese-style modernization and an important foundation for high-quality development. Continue to optimize the environment for the development of the private economy. Increase policy support for the private economy. The economy is the body, finance is the blood, and the two are symbiotic and co-prosperous.
Especially under the current complex economic situation, the financial industry needs to further strengthen its support for private enterprises, guide more financial water to flow to private enterprises accurately, help private enterprises to restore confidence, and enhance development momentum and vitality.