China is expected to step up issuance of micro-and-small enterprise financing bonds as part of broader ambitions to improve financial inclusion.
Data from Wind indicates that as of 27 May 23 Chinese banks had issued issued 274.28 billion yuan in micro-and-small finance bonds (小微金融债 ), as compared to just 64 billion yuan during the same period last year, while the month of March alone saw total issuance of 130 billion yuan.
These micro-and-small finance bonds all had face values of under 4%, for a marked reduction compared to 2019.
Out of these 23 issuers nine were municipal commercial banks, seven were joint-stock banks, five were rural commercial banks and just two were big state-owned banks.
Industrial Bank Co. issued 57 billion yuan, while Ping An Bank and China CITIC Bank both issued 30 billion yuan in micro-and-small finance bonds.
Bank of Beijing issued 40 billion yuan, while other lenders issued bonds to the order of around several billion yuan.
At present Chinese regulators focus on assessment of micro-and-small enterprise business growth, loan quality, product and service innovation, strategic positioning and management procedures when assessing applications from banks for the issuance of micro-and-small finance bonds.
Golden Credit Rating chief financial analyst Xu Chengyuan (徐承远) said to state media that in future regulators will likely reduce the qualifications for issuers, to enable more banks to issue such bonds.
“However, it must be noted that that the space for improvements to issuance costs for the micro-and-small finance bonds of small-and-medium sized banks is limited, and against a background of declining loan prime rates there is perhaps not sufficient incentive for their issuance” said Xu.