What’s new: Citic Securities Co. Ltd., China’s largest brokerage, won regulatory approval to sell 80 billion yuan ($1.2 billion) of bonds over two years, the company said Tuesday.
The bond sale will be on top of a planned offering of 30 billion yuan of subordinated debt approved in September and 50 billion yuan of corporate bonds approved in May.
In 2020, Citic Securities issued 72.6 billion yuan of corporate bonds. The brokerage has 15 bond issues totaling 38.2 billion yuan that come due this year.
The background: Bond issuance has been one of the main channels for brokerages to supplement capital. In an environment of low interest rates and relaxed regulatory restrictions on brokerages’ debt relative to net assets, large brokerages are more motivated to raise funds through bond sales.
China’s new securities law, which became effective in March 2020, removes a restriction that the accumulated bond balance of a securities company shall be no more than 40% of net assets.
In 2020, China’s brokerages issued 1.67 trillion yuan of corporate and short-term financing bonds while repaying 1.31 trillion yuan of debt, leaving net new financing of 360 billion yuan, double the 2019 total.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bobsimison@caixin.com).
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