Corporate bond issuance soars in 2011

Last year saw a surge in the number of corporate bonds issued by non-State owned firms, and analysts predict the trend will continue this year, as regulators continue to promote the use of bonds by firms seeking to raise capital.

There were 83 corporate bond issuances in 2011, up around 260 percent year-on-year, raising 129.12 billion yuan ($20.45 billion), up 152.43 percent. A total of 70 non-State owned companies issued corporate bonds, according to figures from data provider Wind.

In 2011, the China Securities Regulatory Commission (CSRC) promoted the issuance of corporate bonds by simplifying the approval process and shortening the approval time.

Corporate bonds are issued by non-State owned enterprises, and are overseen by the CSRC, while enterprise bonds are issued by State-owned enterprises (SOEs) and must be approved by the NDRC, China's top economic planner.

SOEs issued 196 enterprise bonds last year, raising 251.54 billion yuan, down 11.02 percent year-on-year.

"The overall sluggish economy in 2011 didn’t prevent the corporate bonds market from growing, and the growth will build a solid demand foundation for the bonds market in the future,” said Wu Zhihong, general manager of fixed income from Hongyuan Securities. ”More capital demand from companies as a result of a decrease in both the economy and CPI growth will boost demand for bonds this year.”

In 2011, the top 10 underwriters accounted for 55 percent of corporate and enterprise bond issuances by value, with China Galaxy Securities, Guotai Junan Securities and GF Securities being the top three in terms of value.

According to Wu Zhihong, with the deepening of the bonds market, traditional leaders in security underwriting are being challenged by newer, smaller firms such as Hongyuan Securities, Chinalion Securities and GF Securities.