The "Secret" Of The Interest Rate Adjustment Of Bond Sales: The Issue Rate Continues To Fall, And The Issuer'S Return Period Reduces Interest Rates.

A relaxed environment has allowed more recent bonds to be sold back to lower the coupon rate.

In May 25th, the three companies of Huaxia happiness, Xiamen rail transit Group Co., Ltd. and Beijing incredibly Home Investment Holdings Group Limited announced that they would exercise the issuer's option to adjust the coupon interest rate and reduce the coupon interest rate of the related bonds issued.

The 3 bonds involved are "18 China 03", "17 ha rail 01", "18 actually 01", and the interest rates of 3 bonds after adjusting the coupon rate are in June 20th, July 20th and July 20th respectively.

Twenty-first Century economic report combing reporters found that the initial issuance rates of 3 bonds were 7.15%, 4.55% and 7.5% respectively, and the issuers lowered their interest rates by 275BP, 300BP and 345BP respectively.

Information from the issuer shows that the exercise of the option to adjust the coupon interest rate and the reduction of the coupon interest rate of the bonds are determined according to the actual situation of the company and the current market environment.

"The overall issuance rate of credit debt in the current market is lower. For issuers, the exercise of the right to reduce coupon interest is a normal behavior in the current context. It can be seen that a lot of corporate bonds with coupon interest rates above 7% fall to 4% interest rates." In May 26th, a private firm in Beijing told the economic news reporters in twenty-first Century.

It is worth noting that the issuer adjusted the coupon interest rate, but there is "18 gold 03" contrary to the "prospectus" agreed to adjust the coupon rate of "warning", which makes the market more concerned about the issuer's compliance issues.

Many issuers lowered interest rates

In fact, in recent years, many issuers have made the choice of reducing the coupon rate when they are faced with the choice of right of way. Earlier, the "17 special changes 02", "18 Pro temporary debt 01" and "17 Asia Di 01" and other bonds all announced the subsequent down interest rate.

In twenty-first Century, according to Wind data, according to the Wind data, credit bonds (including corporate bonds, corporate bonds, medium-term notes, etc.) before the sale date of May 25th this year have reduced the coupon rate after the expiration of the sale.

Specifically, the 73 largest return in May 25th, the biggest reduction in coupon interest rate is the "150 division debt", the adjusted coupon rate is 3.1%, compared with the issuance of 6.1% of the coupon rate, down by 300BP. Second, there are "17 Jin Jiao 01" and "18 industry 01", two bond adjusted coupon rates are 3.6% and 2.95%, respectively, down 290BP and 275BP.

According to the time, the sales date of the 73 bonds was concentrated in 3 and April this year, accounting for 56, accounting for 77%. In January, there were no bond discount rates in the bonds that were sold back in January, and 8 and 9 in February and May respectively.

Overall, this year, 209 credit debt, including corporate bonds, corporate bonds, medium-term notes, and so on, returned to sale day before May 25th. 73 of the coupon rates were reduced after the expiration of the sale, accounting for 35%. In addition, 82 bonds did not adjust the coupon interest rate, accounting for 39%, while only 54 of the bonds that raised the coupon interest rate accounted for about 26%.

"The current market is loose and financing is much easier than in the past two years, so issuers will basically reduce the coupon rate and reduce the cost of financing. On the contrary, when the financing is tight and the interest rate is high, the issuer will raise interest rates as far as possible so that the holder will not be sold back." The aforementioned agency said.

In fact, from the current interest rate trend of credit bond issuance, its downward trend is also very obvious.

      Wind data show that since January this year, the weighted average of the monthly average weighted corporate debt issuance rate of all the time limit and rating has decreased continuously, from 4.28% in January to 3.2% in May (up to May 26th), and in the short run and the central voting system, respectively. The average interest rate of the average monthly average increase has decreased from 2.76% in January to May in May (up to 1.85%), while the median voting rate has been increased from 0. 4.01% of the share fell to 3.23% in May (up to May 26th).

The average monthly weighted average interest rate of corporate debt in May (up to May 26th) increased by April, but it was still down compared with the January interest rate this year.

"During this period, especially in March and April, the issue market was getting warmer. As the bond market as a whole, interest rates were down, or even continuously low, and not only were issuers willing to issue, but investors were willing to buy, forming a market pattern of supply and demand flourishing. In addition, this year, the regulatory level has also released many new policies, which have increased policy support and are also guiding financing to reduce costs. A bond trader of a large brokerage firm in Beijing said.

Compliance disputes

Although the issuer chooses to lower the coupon interest rate in the current market environment is a natural act, but in practice, there are also issuers who ignore interest rates and ignore rules.

In fact, according to the rules of the prospectus for some bonds, the issuer does not support the reduction of coupon interest rate.

For example, before the "18 gold 03" case, the announcement of the Golden Group announced that at the end of second, the company chose to lower the coupon rate to 1.50%.

In accordance with the bond interest rate and determination method in the prospectus issued by the golden group, the bonds of this period are: "at the end of second, the company can choose to adjust the coupon rate". "The 1 year coupon interest rate after the 1 year remaining period is the base point for the coupon interest rate plus the company's promotion in the first 2 years of the term".

In accordance with the statement that the "coupon interest rate plus the company's promotion base" in the first 2 years of the term of existence, "18 gold land 03" reduces the coupon's interest rate obviously.

In the subsequent reply, the gold group said that after careful study of the relevant laws and regulations and solicitation of lawyers' opinions, it was held that "18 gold 03" and "prospectus" did not support the company unilaterally reducing the coupon interest rate of the current issue. The trustee in the gold company also said that after verification and communication with the company and major bondholders, "18 gold 03" "prospectus" related agreements do not support the company unilaterally reduce the coupon interest rate of this issue.

Finally, "18 gold 03" did not carry out the coupon interest rate adjustment.

In the recent case of "18 China 03", the issuer reduced the coupon rate of 2 years to 4.40% in the 2 year after "18 China 03".

According to the provisions of the "18 China 03" prospectus, at the end of second, if the issuer exercises the option to adjust the coupon interest rate, the coupon interest rate of the unsold part of the bonds is adjusted for the first 2 years in the first 2 years, and the fixed point will remain unchanged for 2 years after the renewal period.

That is to say, the coupon rate of "18 China 03" is adjusted according to the Convention as the "2 year coupon interest rate plus adjustment base point", that is, "7.15% plus adjustment base point".

In contrast, Huaxia happiness decided to reduce the coupon rate of the bonds in the 2 years to 275BP from 4.4% to "7.15%-275BP".

According to the company, the issuer thinks that according to the specification, it may choose to raise or lower the coupon rate at the end of second, and it will remain unchanged for 2 years after the date of issue. The issuer has the right to adjust the coupon rate of the 1 years after the end of the current third year.

"The adjustment of the base point is actually inclined to raise the coupon interest rate. At the beginning of the issuance of the bond, the interest rate of the selling interest rate" only increases or decreases "is also a bonus point for many investors. According to the logic that can be raised and downregulated, the initial clause should be stated as "adjusting interest rate" without having to write as "adjusting the base point". A private agency believes.

However, the current market environment has changed greatly compared with the situation of "financing difficulties and financing expensive" in 2018. Of course, this high interest rate and the original "investors" approach seems to be no longer necessary.

It is worth noting that in May 18th, Huaxia happiness issued a notice on the proposal to reduce the coupon rate of the 18 Chinese 03 bonds, seeking investor advice.

The announcement indicates that if investors have any suggestions for the issuer to reduce the coupon rate of "18 China 03", please contact the issuer or bond trustee of CITIC Securities by May 22nd. In the May 25th announcement, the Chinese side said that as of May 22, 2020, there was no dispute between investors and the CITIC Securities Limited by Share Ltd of the company and the trustee of the current bond.

CITIC Securities also explained separately whether the adjustment is in line with the prospectus agreement. It is considered that the issuer can choose to raise or lower the coupon rate at the end of second according to the "prospectus" of the bond. The proposed reduction of the coupon interest rate of the current bond is in line with the relevant provisions of the prospectus for the current issue of bonds.

"We have different understandings of text expression. After these times, the issuers and intermediaries will have corresponding adjustments in the prospectus, so as to avoid similar problems. For example, in the corresponding terms of many corporate bonds, it is simply written that the issuer can choose to adjust the coupon rate. The private placement agency said.