"Double-creative debt" into a three-board financing tool future scale is worth looking forward to

In November, the New Third Board will issue debts intensively. Will the new three board financing channel be more inclined to debt financing in the future? The "Daily Economic News" reporter noted that in the past year, the main bond types of the New Third Board include corporate bonds, private debts and "double debts." One of the most intriguing is the “double-creation bond”. This year, nine new three-board listed companies have issued plans or have been successfully issued.

Many companies push "double debts"

“Double Creative Debt” is called Innovation and Startup Corporate Bonds. On March 8, 2016, it was launched by the China Securities Regulatory Commission. At present, 9 companies have issued “double-creative bond” issuance plans or have been successfully issued.

The Essence Securities research report mentioned that the target company in the initial stage of the “Double Chuangbond” pilot is the SMEs that are going to be listed, have been or are planning to be listed on the New Third Board. However, the "Daily Economic News" reporter noted that a large part of the companies that have issued "double debts" are new three-board enterprises.

The “Double Chuang Bond” is issued to qualified investors in accordance with the “Measures for the Administration of Issuance and Transaction of Corporate Bonds”. The “Double Chuang Bonds” issued by some enterprises may also be issued by the issuer’s directors, supervisors, senior management and shareholding ratio. More than 5% of shareholders subscribed and listed on the Shanghai Stock Exchange or the Shenzhen Stock Exchange. According to the coupon rate of the issued “double-creation debt”, the 1-year period is around 5.35%, and the 3-year period is around 7%-8%.

Zhu Rong, Assistant General Manager of Fixed Income Department of Soochow Securities, the lead underwriter of “16 Longteng 01” and “16 German Debt”, told the reporter of “Daily Economic News” that in the traditional sense, “double creation” enterprises have raised more capital from the capital market. For equity financing, the advantage of “double-creation debt” is that it can be tailor-made to solve its financing problems.

Jiang Hongjun, the general manager of the “16 German Debt” issuer of Depin Medical, told the reporter of “Daily Economic News” that the issuance of “Double Chuangbond” has two meanings for the company. The first is to effectively solve the financial problems of the company's development, and bring financial assistance to the enterprise's production transformation and technological innovation. Secondly, compared with equity financing and bank loans, the issuance process of “double debt” is relatively simple.

Jiang Hongjun said that as a new three-board listed company, the company has also considered the issue of equity financing, but in the early and mid-development, the cost of adopting equity financing is relatively high, and it takes longer for investors to choose and price. It will also involve issues such as the decentralization of the company's decision-making power and the dilution of the old shareholders' equity.

In addition to Depin Medical, another director of the New Third Board listed company, which has successfully issued the “Double Chuangxin Debt”, introduced to the reporter of “Daily Economic News”. According to the actual situation, the “double-creative bond” has high efficiency and cost. Low, the use of raised funds is less restrictive, and the agency fee is lower than equity financing, which is the advantage of “double debt”.

“The “double creation” enterprises in the growth period have a higher cost of equity financing. The excessive dilution of equity has an impact on the company’s operation and management. The “double-creation debt” belongs to debt financing and direct financing, which is comparable to other varieties. Advantages. Secondly, 'double-creative debts' can solve the problem of funding deadline to a certain extent. Since 'double-creating' enterprises often have the characteristics of light assets, it is more difficult to obtain long-term debt financing, and enterprises need 2 to 3 years or even more. In the long-term debt financing, 'double debts' provided a good choice for it." Zhu Xi added.

He also pointed out that the introduction of a "double-creation bond" can not completely solve the financing problem of "double-creative" enterprises, but this new variety as a part of the capital market to provide financing services for "double-creative" enterprises, no doubt Will play an important role.

Institution: Credit issues still exist

The issuance of “double-creation debts” reminds people of the private equity debts of SMEs that were once popular.

"Small and medium-sized enterprises have relatively few private debt issuances, mainly due to the credit and repayment ability of the issuers. The introduction of such bonds is mainly for the purpose of solving the financial difficulties of SMEs, financing and other issues. Such financial products have also experienced some default problems, which have gradually been marginalized by the market and regulatory agencies,” said Guang Zefeng, director of the National Securities Investment Bank headquarters.

Regarding the default incidents since the issuance of private equity bonds issued by Guangzefeng, the “Daily Economic News” noted that in March of this year, the drilling technology integrated service provider Zhongcheng Xinxing issued the SME private placement bonds in 2012 (“ 12 Zhongcheng Debt") failed to pay in full on time, involving an amount of 38.43 million yuan.

In the face of default in private debt, Guang Zefeng believes that most of the companies that defaulted were in the traditional industry, and the development was greatly affected by the macro economy. At the same time, the company's own ability to resist risks is insufficient, and the cash flow situation is not good. Many factors have caused default.

Since there is a foresight of the car, what is the development prospect of "double debt"?

Guang Zefeng said that there have been precedents for SMEs to raise private debts. "Double debt creation" will draw a lot of lessons. After all, "double creation" debt issuance is a company whose shares can be circulated, and the credit itself is also higher than the issuer of private debt. To be high, this is the advantage of “double debt creation”, but the future depends on the market environment or market players.

The financial scholar Bu Naxin also believes that the current regulatory layer is promoting “double debts” in the innovation layer of the New Third Board, which is the policy intensity to the innovation layer. The qualifications of most companies in the innovation layer will be better than those on the GEM. So why not give them some financing options? The regulatory layer can provide enough options. As for whether the enterprise chooses, it is the enterprise's own consideration.

However, there are also large-scale brokerage investment bank vice presidents who do not want to be named to the "Daily Economic News" reporter, "double debts" can not be said to be particularly good, and other listed companies also have such problems in issuing bonds, which is the issue of corporate credit.

For the problem of low credit, the reporter of "Daily Economic News" noticed that the SSE has a high risk for the "double-creative" enterprises, and actively cooperated with the CSRC to study ways to promote the relevant risk mitigation, including but not limited to sound investors. Appropriateness system, introduction of diversified credit enhancement methods, etc.

Zhu Haibin, head of Essence Securities' new three-board research, believes that “double-creative debt” has a more prominent advantage in terms of industry and regulation compared with the private equity of small and medium-sized enterprises (reducing corporate financial risk and increasing transparency). . In addition, the "double-creation bond" was born at a good time, and there is strong support from the policy. The future scale of "double-creating debt" is worth looking forward to.

Industry: brokers must consider issuer conditions

As for which types of companies can issue "double-creation debts", Zhu Xi told the "Daily Economic News" reporter that "double-creative bonds" are different from ordinary corporate bonds, and the basic conditions for issuing are that the issuer is indeed "double-creative". Enterprises, there is currently no rigid requirement for the issuer's financial data.

Jiang Hongjun, general manager of Depin Medical, said that in the future, Depin Medical will continue to adopt the plan to issue “double debt” financing. “Double debt creation” is a variety of credit bonds, which does not require pledge or mortgage, and is more flexible. Secondly, the "double-creative bond" is highly efficient. The company's "16 German Debt" project was launched in late September this year, and the release was completed on October 20. The process is simple and can guarantee the rapid availability of funds.

Specific to the cost of issuing "double-creation debts", Cui Yanjun, the director of the North and South Heaven and Earth, and the "three-plate circle Cui squad leader", told the "Daily Economic News" reporter that the "double-creative bond" issuance rate is basically 5%~ 9%, but also bear the underwriting fee of 0.3%~0.8%, the audit fee of more than 200,000 yuan, the lawyer's fee of more than 50,000 yuan, and many need to be rated (generally more than 300,000 yuan) and guarantee (generally 1%~ 2.5) %). Of course, because it is now a pilot promotion period, the cost is relatively low.

In fact, in March of this year, three “double-creative” enterprises such as Fanglin Technology, Pujingde, and Jinhong Gas successfully issued corporate bonds, “16 Su Fanglin”, “16 Pu Filter” and “16 Su Jinhong”. The three single “double-creative” corporate bonds have a total financing of 60 million yuan. The above three issuers are all listed on the New Third Board. These three single corporate bonds are also the first time for the “double-creative” SMEs to test the water market.

It is worth mentioning that although the above-mentioned brokerage collectors mentioned that the “double debt” issuance does not require hard financial indicators, in fact, the “Daily Economic News” reporter noted that several companies that issued “double debts” were issued. The financial situation is not bad.

Among the nine new three-board listed companies that have issued or proposed to issue “double-creative bonds”, such as Fanglin Technology, Pulu De, Jinhong Gas, Fantuo Creative, Shiyuan Frequency Control, and Longhua Film, the 2015 annual results have all achieved profitability. Among the 9 listed companies, the highest and lowest operating income in 2015 were Jinhong Gas and Depin Medical, with data of 550 million yuan and 28,872.25 million yuan respectively. In terms of net profit, Fanglin Technology had the highest net profit in 2015, which was 59.439 million yuan; the world's frequency-controlled net profit ranked last, and 2015 still achieved a net profit of 1,684,300 yuan.

In response to the issue of whether there is a clear financial requirement for the issuance of “double debts”, some industry insiders revealed that each broker’s requirements for issuers will be different. Some brokerage associations require the issuer to have a certain asset size and net profit. For example, the required net profit is more than 20 million yuan, and there are also requirements of more than 50 million yuan.

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