Zhong Guo Ji Jin Bao·2025-09-28 23:34Core Viewpoint - The surge in bond issuance by securities firms in China reflects a strong demand for capital, driven by increased market activity, expansion of capital-intensive businesses, and favorable financing conditions in a low-interest-rate environment [1][4]. Group 1: Bond Issuance Scale - As of September 28, 2023, the total bond issuance by securities firms has exceeded 1.18 trillion yuan, marking an 83.27% year-on-year increase, with 616 bonds issued compared to 366 in the same period last year [2]. - Monthly issuance saw a significant increase, with July reaching 142.99 billion yuan and August further rising to 275.5 billion yuan, setting new records for both volume and scale [2]. - Leading firms dominate the issuance, with seven firms surpassing 50 billion yuan in bond issuance, including China Galaxy, which issued over 100 billion yuan [2]. Group 2: Use of Funds - The bond issuance is characterized by a diverse allocation of funds, including debt repayment, liquidity support, and targeted investments, particularly in margin trading and derivatives [3]. - A significant portion of the funds is used for refinancing high-interest debt, optimizing debt structures, and enhancing operational capital for business expansion [3]. Group 3: Factors Driving Demand - The increase in bond issuance is attributed to multiple factors, including a strong A-share market, lower financing costs, and a supportive regulatory environment [4]. - The A-share market's performance, particularly the Shanghai Composite Index surpassing key thresholds, has led to a surge in trading activity, boosting demand for capital [4]. Group 4: Issuance Costs - The average interest rates for bond issuance have decreased compared to the previous year, with company bonds averaging 1.89%, subordinate bonds at 2.25%, and short-term financing bonds at 1.77% [5]. - Debt financing is favored over equity financing due to its larger funding capacity, lower costs in the current environment, and flexibility in meeting different business funding cycles without diluting equity [5]. Group 5: Future Outlook - The demand for capital among securities firms is expected to remain strong, with projections indicating continued high bond issuance in the fourth quarter [6]. - Leading firms are likely to strengthen their competitive positions due to capital and cost advantages, potentially intensifying the "Matthew Effect" in the industry [6].