2020-11-21

Yongmei’s debt defaulted and then fermented, many bank rating agencies were investigated

By yqqlm yqqlm

Credit debt default and aftershocks continue. Following Haitong Securities, on November 19, the Industrial Bank, Everbright Bank, China Chengxin International Credit Rating Co., Ltd. and other institutions were also Coal Holdings’ breach of contract was implicated and was subject to self-discipline investigation for suspected violation of relevant regulations. The fall of high-rated credit bonds has led to a number of financial institutions that urgently need market reflection. In the opinion of analysts, after high-credit bonds default, the market pressure faced by rating agencies is the first to bear the brunt. If credit rating agencies violate regulations, it is not conducive to creating a fair, just, honest, and effective market environment. At the same time, whether the underwriters as”gatekeepers” have fulfilled their due diligence obligations and verification duties have also been questioned.

Rating agencies cited doubts

The news from the China Interbank Market Dealers Association (hereinafter referred to as the”Dealers Association”) on November 19 showed that the Association of Traders Coal and Electricity Holdings Group Co., Ltd. (hereinafter referred to as”Yongmei Holdings”) conducted self-discipline investigations and interviews with a number of intermediary agencies, and found that Industrial Bank, Everbright Bank and lead underwriters such as Zhongyuan Bank, as well as China Chengxin International Credit Rating Co., Ltd. and Sigma Certified Public Accountants (special general partnership) have allegedly violated the self-regulatory rules of the interbank bond market. The Dealers Association will initiate a self-discipline investigation of relevant intermediaries.

Recently, there have been many defaults in the credit bond market, and the default of Yongmei Holdings, a large state-owned enterprise in Henan with high credit ratings, directly detonated market sentiment, causing the public to question the professionalism and credibility of rating agencies.

On November 10, Yongmei Holdings announced that due to tight liquidity,”20 Yongmei SCP003″ failed to repay the principal and interest in full on time, which constituted a substantial default. According to Wind data, on the same day, China Chengxin International, a rating agency, quickly downgraded Yongmei’s main credit rating from AAA rated on October 10 to BB, and the related credit bond ratings were simultaneously downgraded. On November 12, another 20 bonds of Yongmei Holdings as the issuer triggered a cross-default.

Beijing Business Daily reporter noted that under the recent breach of contract, Wind data shows that since November, 6 companies that have been rated as A-level or above, including Yongmei Holdings and Ziguang Group, have been Downgrade the rating.

After the default of high-credit bonds, the market pressure faced by rating agencies bear the brunt. Insiders told the Beijing Commercial Daily that the credit rating agency is a special intermediary service agency in the financial market. It plays an important role in prompting credit risks for investors to make decisions and allocate market resources. If a credit rating agency violates regulations, it is not conducive to creating a fair, just, honest and effective market environment. The default of a series of high-rated state-owned enterprise bonds currently reflects to a certain extent that domestic credit ratings are still insufficient in terms of risk pricing. At the same time, he also pointed out that there is a certain degree of”predictive” component in credit ratings, which cannot ensure that 100%of high-rated corporate bonds will not default. The actual operation of the company itself is affected by many factors.

Responsibilities of brokerage firms need to be strengthened

In recent years, my country’s bond defaults have gradually become normal. Wind data shows that as of November 19, a reporter from Beijing Commercial Daily issued a report that 115 credit bonds defaulted this year , The scale of default is 133.056 billion yuan. In 2019, the number of defaulted credit bonds was 184, and the default scale was 149.404 billion yuan.

“This year, many high-rated companies defaulted on debt due to macro-external reasons, and more importantly, their own risk resistance and weak cycle capabilities. This year’s situation is relatively special, and the sudden epidemic has continued to impact business operations. The cash flow of some companies has been greatly affected; this year’s energy commodity and capital markets have fluctuated sharply. However, judging from the characteristics of recent defaulting companies, the underlying reasons are the lack of hematopoietic capacity of the company itself, the imbalance of asset-liability structure, and imperfect internal governance.”The above-mentioned person told the reporter of Beijing Commercial Daily.

It is worth mentioning that after Yongmei Holdings issued”20 Yongmei MTN006″ on October 20, 2020, a substantial default occurred quickly, whether the underwriters as”gatekeepers” performed their due diligence The duty of investigation and the responsibility for verification and checkpointing were questioned.

Previously, on November 18, the Association of Dealers announced that Haitong Securities and its related subsidiaries were suspected of providing assistance for the illegal issuance of bonds by Yongmei Holdings during the self-discipline investigation of Yongmei Holdings and suspected manipulation For market violations, Haitong Securities and its related subsidiaries will conduct self-discipline investigations. On November 19, the Association of Dealers once again”named” to investigate lead underwriters such as Industrial Bank, China Everbright Bank and Zhongyuan Bank, and once again sounded the”gatekeeper” alarm.

Wang Jianhui, a senior analyst in securities business, pointed out that if the underwriters have insufficient due diligence, lack of risk control checks, insufficient information disclosure to ensure issuance, and pricing cannot truly reflect the company’s situation, it is very easy to do The underwriting of”thunderstorming” defaulted bonds planted hidden dangers. In addition, if there are more defaults on the underwritten bonds, it will also have some adverse effects on the company’s ability to expand its business and brand effect. When some systemic factors are unavoidable, the underwriters should also do more detailed research on the industry, grasp of the macro situation, and investigation of business activities.

In response to the investigation, a reporter from Beijing Commercial Daily tried to interview relevant parties. Industrial Bank and China Everbright Bank did not respond. No one answered the phone calls of Zhongyuan Bank and China Chengxin International Credit Rating Co., Ltd.

Break the”confidence in state-owned enterprises”

The reason why this turmoil has attracted greater public attention is that the defaults of Yongmei Holdings and Ziguang Group have broken the public’s view of high-rated state-owned enterprise bonds. The”just redeeming faith” triggered a chain reaction of significant discounts on related bonds and cancellation of issuance. As the largest holding institution in the bond market, the underlying assets of the bank’s wealth management products are heavily allocated with bonds. The banks are affected, and how investors should avoid risks has also triggered more discussions.

In this regard, Everbright Bank Financial Market Analyst Zhou Maohua pointed out that several high-rated bonds defaulted this time, which once caused market panic, but the current market performance has limited impact on the bank. The main reason is that bond investment accounts for a limited proportion of bank profits; the proportion of bonds with high ratings and liquidity in the bank’s bond portfolio is relatively large; at the same time, due to the large bank stock, the overall impact of several bond defaults is currently under control; in addition, the recent market sentiment has gradually stable.

“In a mature credit bond market, a certain percentage of bond defaults is a normal phenomenon, which helps release market risks and rationalize asset pricing. However, as the bond market matures, bond defaults become normalized and market volatility Intensified and so on, put forward higher requirements for investors’ ability to avoid risks. Investors need to formulate investment strategies in detail, strengthen asset-liability management and bond portfolio management, in-depth macro, market and policy research, and be alert to asset fluctuation risks.” Zhou Maohua said .

Source:Beijing Commercial Daily