Sou Hu Cai Jing·2025-07-19 09:03Core Viewpoint - The bond underwriting market in China is experiencing severe price competition, with underwriters willing to accept extremely low fees to secure business, leading to regulatory investigations into several institutions for abnormal pricing practices [1][6][10]. Group 1: Underwriting Fee Trends - The underwriting fees for the 2025-2026 secondary capital bond project by Guangfa Bank were reported as exceptionally low, with fees as low as 700 yuan and an average of around 10,000 yuan per institution, significantly below market averages [3][4][6]. - The total underwriting service fee for the six selected institutions was only 63,448 yuan, raising concerns about the sustainability of such low pricing [3][4]. Group 2: Regulatory Response - The China Interbank Market Dealers Association has initiated self-regulatory investigations into six institutions for their unusually low bids, citing potential violations of self-regulatory rules [6][10]. - Previous instances of low underwriting fees by Guangfa Bank have also drawn market scrutiny, indicating a pattern of aggressive pricing strategies that may undermine market integrity [6][10]. Group 3: Market Dynamics - The intense competition among underwriting firms is driven by a desire to increase market share and rankings, leading to a cycle of low pricing that may not cover operational costs [7][9]. - The top six banks dominate the bond underwriting market, holding a combined market share of 53.7%, which pressures smaller firms to engage in price competition to secure business [9]. Group 4: Industry Concerns - There are significant concerns that continued low pricing in the underwriting market could lead to inadequate due diligence and increased risks of bond defaults, potentially harming the overall market [10]. - Experts suggest that a shift in focus from low pricing to value creation is necessary to restore a healthy competitive environment in the bond underwriting sector [10].