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the recent sharp fluctuations in the secondary market for credit bonds have had a significant impact on the primary market.

since late august, a number of bonds have announced the cancellation or delay of issuance. judging from the reasons for the cancellation, secondary market fluctuations have become the core reason, and high-grade credit bonds have become the main force behind the cancellation.

market analysts believe that high-rated entities are sensitive to interest rate costs, so they are more willing to cancel issuances when the market fluctuates and wait for the market to stabilize. at present, the fluctuations in the secondary market are becoming more stable, and the impact on the primary market will gradually dissipate, and there will be no subsequent large-scale cancellation of issuances.

credit bond issuance is intensively cancelled

since mid-august, there has been a significant peak in the cancellation of credit bond issuance. according to statistics from securities times and china securities journal, since august 20, the number of credit bond cancellations and postponements has reached 51, with a cumulative scale of about 40 billion yuan, while there were only 2 and 5 in the first and middle of the month.

this is the second time this year that there has been a small peak in the cancellation of issuance. in march this year, due to the market's expectation of a stronger bond bull market, many bonds were cancelled in order to wait for lower interest rates to be issued. in mid-to-late march, a total of about 40 billion yuan of issuance was cancelled.

the cancellation of the issuance this time is also related to the secondary market, but the specific reasons are slightly different.

"the main reason for the sharp increase in the number of credit bond issuances canceled and postponed in late august is the significant increase in issuance costs," said yu lifeng, senior analyst at orient securities' research and development department, in an interview with securities times and china securities journal reporters.

since the beginning of august, the central bank has stepped up its bond market regulation efforts, and the yield of interest-bearing bonds has been adjusted first, followed by credit bonds. according to wind data, from august 20 to august 29, the average issuance rate of credit bonds (weighted by the issuance amount) rose by 37bps, of which the average issuance rates of aaa, aa+ and aa credit bonds rose by 25bps, 42bps and 56bps respectively.

zhang qi, a senior researcher at the research and development department of china securities credit ratings, also said that in august, the increase in the number of credit bond cancellations and postponements was mainly affected by market fluctuations, and many issuers also mentioned "market fluctuations" in their bond cancellation announcements. judging from the market situation, in early august, the central bank increased its regulation of the bond market, and credit bond interest rates adjusted. previously, the interest rate level of credit bonds had been pushed down to an extreme level, and the cost-effectiveness of credit bond allocation was low. the "preventive" redemption and "position adjustment" of some institutions also aggravated the interest rate correction. after the market interest rate began to rise, the number of credit bond cancellations and postponements also increased significantly.

the subsequent market tends to stabilize

the continued large-scale cancellation of credit bond issuance may have a certain impact on the supply and demand balance in the secondary market. however, at present, the small peak of this round of cancellations may not last too long.

as the central bank increased its open market injections, the money supply loosened at the end of august and the interest rates on credit bond issuance have fallen significantly.

"as of september 4, the average issuance rate of credit bonds fell by 69bps from august 29 and was lower than the level at the beginning of august. therefore, we have seen a significant reduction in the cancellation and postponement of issuance. from august 30 to september 4, only four credit bonds were canceled," said yu lifeng.

zhang qi also believes that this cancellation climax will not continue. at present, the institutional redemption climax has come to an end, interest rates have stabilized, and the number of credit bond cancellations has dropped significantly.

in addition, the credit ratings of the issuers of this round of cancelled and postponed bonds are mainly aaa and aa+, and the issuers are mainly central enterprises and local state-owned enterprises. these medium and high-rated state-owned enterprise issuers are more sensitive to the issuance interest rate. yu lifeng believes that given that the current issuance interest rate has fallen, it is expected that the issuance of bonds by relevant entities will gradually resume, and there will not be a new round of cancellation of issuance.

the subsequent outlook for the secondary market is also relatively stable. huafu securities pointed out that in the last two weeks of august, credit bonds diverged from interest rate bonds, and the spread widening eased slightly until august 29, mainly due to the impact of a certain degree of institutional selling of credit bonds and the rebound caused by the interest rate correction. however, as the redemption pressure eased, the credit spread began to gradually narrow.

"currently, the credit spreads, grade spreads and term spreads of most types of credit bonds have dropped to extremely low historical levels, and it is expected that they will mainly follow the narrow fluctuations of interest-bearing bonds in the future. if the money supply tightens and the long-term yields of interest-bearing bonds rise significantly, credit bonds may adjust again, but the monetary policy has not changed direction, and the asset shortage in the bond market still exists, so the possibility of a sharp increase in credit bond yields is relatively small." yu lifeng said.

editor: luo xiaoxia

proofread by: wang chaoquan