Bond underwriting is not easy.
Recently, a state-owned enterprise in Ningbo announced the bidding results of the bond issuance underwriter, showing that the annual service rate of the winning bid is not higher than 014%。This rate is not particularly low, but it is the result of several reductions during the bidding process, such as the first change announcement will not exceed 018% to 016%, and the second change announcement will not exceed 016% to 015%。
An investment banker from a leading brokerage firm told reporters that the bidders continue to reduce prices, indicating that the competition among underwriters is very fierce and they are in a relatively weak position in the face of some high-quality issuers.
The bidder bargained several times.
On March 5, the official website of Ningbo Public Resources Trading Center released the bidding announcement of Ningbo Jiangbei Investment and Entrepreneurship Development on the bidding project of the underwriter of corporate bond issuance. According to the announcement, the consortium composed of Zheshang ** and Yongxing** won the bid, and the annual service rate of the winning bid was 014%。
The most attractive part of this bidding is that the tendering party has lowered the bidding ** many times.
On February 4, the tender announcement was officially released, and the tenderer required that the annual service rate should not be higher than 018%, and also lists the qualification requirements for qualified bidders, such as requiring bidders to hold the "Business License" issued by the Securities Regulatory Commission;If the consortium bids, all parties to the consortium must hold the "Business License" issued by the China Securities Regulatory Commission;If the consortium bids are conducted, the number of consortium members (including consortium leaders) shall not exceed 2, etc.
On the day of the announcement on February 4, the tendering company immediately issued a correction announcement, which will "the annual service rate shall not be higher than 018% "corrected to" annual service rate not higher than 016%”。
Within 4 days thereafter, the above-mentioned bidding enterprises issued a correction announcement again, which will "the annual service rate shall not be higher than 016% "corrected to" annual service rate not higher than 015%”。That is to say, the tenderer will not exceed 018% rate, down to a maximum of 015%。In the end, the winning bid ** came to 014%。
As of now, it is not clear how large the bond will be.
Underwriters have limited right to speak.
The bidding enterprises have lowered the price many times, and finally can still successfully bid for the tender, which reflects that there is a relatively common phenomenon in the industry - in front of high-quality regions and high-quality enterprises, the underwriters are fiercely competitive, but the right to speak is limited, and bond underwriting is becoming more and more difficult to do. An investment banker from a large brokerage told reporters.
The reporter learned from the interview that the level of the bond issuance rate of the enterprise is affected by many factors, such as the region where the enterprise is located, the qualification of the enterprise itself, the complexity of the project itself, and the difficulty of bond sales in the later stage. High-quality enterprises, such as AAA-rated or central enterprises and provincial issuers, have relatively high subject ratings, bonds are not worried about issuance, and the default risk of duration is also very low, and the rates of similar projects are relatively low.
Good projects are to be grabbed, a bit of a volume, and the underwriters are almost in a passive position, waiting for the issuer to choose. The above-mentioned investment bankers said that of course, some projects are not considered volumes, and the rates are also high, but there may be some risk points. There are already public cases to follow, and the underwriters are held accountable for bond defaults.
The reporter learned that when the underwriter does a single business, it is not only the underwriting fee on the surface, but also the value behind the business. For example, doing more business can make the underwriter rank higher in the industry in terms of underwriting amount and enhance the brand image; In addition, customers can be better maintained, and more cooperation can be carried out as a business opening.
Vicious low-price competition is prohibited.
Although a good project is rolled, the underwriter cannot break through the bottom line to fight.
The reporter noted that even after several price adjustments, the underwriter winning rate of the above-mentioned bond project was reduced to 014%, but compared to some previous floor prices, it is not low. At the end of September 2022, China Guangfa Bank announced the list of 6 lead underwriters of 26 billion bonds, and some of them were as low as 0000046%。
In order to standardize the underwriting of corporate bonds, on September 28, 2021, the China Securities Association issued the "Guidelines for Internal Constraints on Corporate Bond Underwriting". It is mentioned that the underwriting institution should establish an internal constraint system for bond underwriting, and the internal constraint line should include the absolute value internal constraint line and the rate internal constraint line. If the underwriting ** breaks through the internal constraint line of the absolute value or the internal constraint line of the rate, it shall perform the special approval procedures within the company and submit a special explanation stamped with the company's official seal to the association.
The reporter learned from the interview that the guidance price given by the regulator is not less than 5/10,000 of the underwriting rate or the underwriting fee of 1 million yuan, and the bond underwriting fee should not include other intermediary fees such as lawyers and appraisals. If the underwriter does not violate the above guide price, there is no violation of the regulatory requirement of unfair competition.
In June 2023, the National Association of Financial Market Institutional Investors (NAFMII) issued the Notice on Further Strengthening the Regulation of Issuance Business in the Interbank Bond Market, further clarifying the operational specifications for issuance in the interbank bond market and strengthening the self-discipline management of issuance business. The NAFMII found that some bonds had irregularities in the issuance business, such as imprudent issuance pricing, underwriting at low prices in exchange for market share, and failing to follow market-oriented principles to determine interest rate ranges.
Editor-in-charge: Tao Jiyan |Review: Li Zhen |Supervisor: Wan Junwei.
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