With the “debut” of Shenglan convertible bonds on the last day of March, the issuance of convertible bonds ended in the first quarter of 2022, with an issuance scale of more than 80 billion yuan, a new high in the first quarter of the last three years. At the same time, the fluctuation of the secondary market of convertible bonds increased in that quarter.
According to the analysis of insiders, the continuous issuance of financial convertible bonds is the main factor to push up the financing scale. The equity market is weak, and it is expected that there is still some room for compression in the subsequent valuation of convertible bonds.
“gold absorption” announced
With the launch of online issuance of Shenglan convertible bonds, the “gold absorption” of convertible bonds in the first quarter was announced. In the first quarter of this year, the Shanghai and Shenzhen markets issued 80.7 billion yuan of convertible bonds, higher than 75.9 billion yuan in the first quarter of 2021 and 41.9 billion yuan in the first quarter of 2020. However, in terms of issuance quantity, 32 convertible bonds were issued in the first quarter of this year, slightly less than 35 in the first quarter of 2021 and 43 in the same period of 2020.
Insiders pointed out that the scale of convertible bond financing in the first quarter of this year was large, mainly due to the “contribution” of Xinfa bank’s convertible bonds. In the first quarter of this year, Bank Of Chengdu Co.Ltd(601838) , Bank Of Chongqing Co.Ltd(601963) successively issued convertible bonds, with a total scale of 21 billion yuan. Among them, the issuance of heavy silver convertible bonds with a scale of 13 billion yuan was the largest single convertible bond in the first quarter of this year.
In the first quarter, a number of leading enterprises in the industry issued convertible bonds. For example, Tongwei Co.Ltd(600438) issued 12 billion yuan, Zhejiang Huayou Cobalt Co.Ltd(603799) issued 7.6 billion yuan, Longi Green Energy Technology Co.Ltd(601012) issued 7 billion yuan, Citic Pacific Special Steel Group Co.Ltd(000708) issued 5 billion yuan, Tianjin You Fa Steel Pipe Group Stock Co.Ltd(601686) issued 2 billion yuan.
“Convertible bonds are an important supplement to the multi-level capital market and will continue to be issued at a fast pace in 2022.” Huatai Securities Co.Ltd(601688) research team predicts that the supply of convertible bonds will exceed 200 billion yuan in 2022, and the market stock rate will move towards trillion level.
valuation still has compressed space
After the Spring Festival this year, the secondary market of convertible bonds, which has been hot for several months, has weakened rapidly. On March 9, the CSI convertible bond index once fell to 389.24 points, the lowest since August 2021. The CSI convertible bond index fell 8.36% in the first quarter, the largest quarterly decline since the fourth quarter of 2015.
For the recent obvious adjustment of the convertible bond market, analysts believe that the recent weakening of the equity market has prompted the rapid release of the pressure on the overvalued value accumulated in the convertible bond market.
Gf Securities Co.Ltd(000776) fixed income chief analyst Liu Yu analyzed that with the weakening of the equity market, the positive stock support obtained by the convertible bond market is difficult to continue to match the overvalued value of convertible bonds, and the subsequent valuation may continue to be compressed.
Li Yishuang, chief fixed income analyst of Cinda securities, pointed out that the current equity market is still at the bottom stage, and there is no obvious main line in the short term; The convertible bond market is still beset by high valuations.
Citic Securities Company Limited(600030) co chief economist clearly believes that the market risk of convertible bonds has not been fully released. If the equity market continues to adjust, the valuation probability of convertible bonds will continue to be compressed. Considering the potential redemption impact of funds, there is still a lot of room for downward compression of valuation.
“The recent valuation compression is fierce, but the current valuation and price of convertible bonds are above the median level.” Yin Ruizhe, chief analyst of China Merchants Securities Co.Ltd(600999) fixed income, pointed out.
However, Liu Yu said that when it is difficult to tap pure debt opportunities, convertible bonds are still favored by institutions, and some institutions choose strategic buying. Yin Ruizhe said that the rebound can be arranged appropriately in the stage of market shock, but the rhythm should be paid attention to.
