Financial Services Association, April 1 (Editor Li Xiang) Since this year, major state-owned banks have been busy “supplementing their blood,” and the total circulation of eryong bonds has shown an increasing trend. The first three months issued 133.423 billion yuan, 165.59 billion yuan, and 201,037 billion yuan respectively. Beginning in April, the Bank of China began issuing 40 billion yuan of second-tier capital bonds, which began to be issued by major state-owned banks in the second quarter.

According to the Enterprise Warning Notice, among major state-owned banks, the Agricultural Bank and the Industrial and Commercial Bank both faced maturing amounts exceeding 100 billion yuan this year, ranking in the top two. Furthermore, according to institutional estimates, the net financing scale of Eryong bonds will reach 1.16 trillion dollars this year, and there may still be room for increase compared to the same period last year.

Pending issuance, the supply scale of long-term bonds will still be large this year

According to Wind data, in the first three months of this year, the total issuance of Eryong bonds showed an increasing trend, issuing 133.423 billion yuan, 165.59 billion yuan, and 201,037 billion yuan respectively. Judging from the total repayment data for the next nine months, April is the biggest repayment month after September this year, with a total repayment volume of 180,390 billion yuan. Many issuers have already “planned ahead”. In the first 2 working days of April, as many as 9 long-term bonds totaling 44.6 billion yuan were completed. Among them, the Bank of China will issue 2 Tier 2 capital bonds totaling 40 billion yuan on April 2, kicking off the renewal of 2 permanent bonds in the second quarter.

Industry insiders said that judging from historical data, the pace of issuing Eryong bonds is mainly quantitatively influenced by changes in their own capital adequacy ratio and balance management system. There is a certain degree of anticipation, mainly reflected in the fact that most banks complete the issuance of Eryong bonds before maturity. Judging from the stock debt situation, the peak maturity of 2024 perpetual bonds reached its peak in the third quarter. Considering the pre-effect, the issuance volume in the first half of this year is still likely to be high, while the pressure to issue after the third quarter is relatively low.

Looking at annual issuance data, according to Wind statistics, the total issuance scale of Eryong bonds last year was 26,14.997 billion yuan, with a net financing amount of 12,02,629 billion yuan. A bank source believes that under regulatory restrictions and capital supplementation requirements, the probability that the bank will release long-term bonds in 2024 is still high, and the total size of this year is unlikely to be smaller than last year.

Furthermore, according to estimates by Yang Yewei, head of Guosheng's fixed income, if banks want to maintain their capital adequacy ratio without declining when business is carried out normally, after considering the impact of profits, asset quality, and the new capital regulations, comprehensive estimates require about 1.16 trillion yuan in external supplementary capital. This can be roughly regarded as the net financing scale required for Eryong bonds throughout this year.

Yang Yewei said that according to the calculation model, the market value of bond funds investing in financial bonds may increase to 2.65 trillion yuan, an increase of about 552 billion yuan over 2023, and the demand for insurance investment in eryong bonds will also be close to 790 billion yuan. Eryong bonds are still a type worth paying attention to.

Furthermore, judging from the recent approval of bank two permanent bonds, commercial banks, which are mainly state-owned enterprises, have successively obtained new credit approvals. For example, the Agricultural Bank and the Postbank completed issuing a total of 70 billion yuan of perpetual bonds in March. While this helps banks withstand risks, it also enhances the bank's ability to further increase credit investment and support the real economy.

In terms of issuers, according to the Enterprise Warning Notice, stock banks and state-owned banks were the most important perpetual debt redemptors in the second and third quarters, respectively. These two types of entities had the highest renewal demand, 80 billion yuan and 240 billion yuan respectively. Furthermore, among state-owned banks, the Agricultural Bank faced a maximum redemption amount of 160 billion yuan this year, followed by ICBC 125 billion yuan.