Chinese Banks Double Issuance of Micro-Finance Bonds in First Half of 2020

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Chinese banks have stepped up their issuance of bonds to raise funds for small and micro-financial services in the first half of 2020.

Data from the Chinese central bank indicates that 23 commercial banks in China raised 275.28 billion yuan (approx. USD39.35 billion) for micro and small-financing services via 26 bond issues in the first half of 2020.

The issuance scope is two times that for the same period in 2019, while also marking an increase of 34.4% compared to full-year issuance last year.

The weighted average rate for micro-and-small finance bonds issued in the first half was 2.63%, for a decline of 0.89 percentage points compared to the full year average for 2019, and 1.5 percentage points compared to the full year average for 2018.

For national banks the weighted average rate was 2.50%, while for regional banks it was 2.95%.

The 23 issuers of micro-and-small finance bonds in the first half included big state-owned banks such as Agricultural Bank of China (ABC), as well as regional banks in new issuance areas such as Beijing, Guangxi, Jiangxi and Qinghai.

According to Chinese regulators micro-and-small finance bonds can help boost financial inclusion by “playing a low-cost, stabilisation role, and helping to raise the quality and effectiveness of the micro-and-small finance services of commercial banks.”

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