Corporate Bond Market –China February 2012
Market Research Report : Corporate bond market in china 2012
Jan 19, 2015
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Corporate Bond market is one of the fastest growing segments of the financial sector in China.
The report begins with a brief introduction on the various segments of the bond market in China followed by a further split of corporate bond segments. Evolution of the corporate bond market in China entails a brief description of the major events that have taken place since its inception. The market overview section provides an overview of the global corporate bond market in terms of issuance of corporate bonds and corporate bonds outstanding. This section also includes a snapshot of the corporate bond market in China covering the market size with forecast figures between 2009 and 2015. The section also provides information about the investor profiles of the corporate bond market in China.
Furthermore, the report delves into the credit spread between corporate bonds yield and benchmark government bonds yield spanning between various investment grades and tenor.
Key drivers of the industry explain the factors influencing the growth of the corporate bond market in China in detail. Some of them include growing economy of China, corporate bond market reforms and product innovation.
Major challenges that could impede the development and growth of the Chinese corporate bond market include inadequate credit rating system, impact of securitization, inadequate information disclosure and underdeveloped secondary bond market.
The government initiatives section includes a detailed description of the steps to be taken by the government of China in view of developing the corporate bond market under its 12th five year plan. This section also covers the major regulators of the corporate bond market alongwith key steps to be taken by them for the purpose of developing the corporate bond market in China.
Key emerging trends that are of marked importance to the corporate bond market in China include foreign participation and rise in market liquidity.
The report contains a brief analysis on the competitive landscape of the corporate bond market in China. This section provides a three dimensional analysis of the key corporate bond issuers’ revenues, profits and market capitalization followed by a ranking of companies based on the issuance volume of corporate bonds in China. The report also features brief profiles of the key corporate bond issuers in the market along with a snapshot of their corporation, financial performance and business highlights thus providing an insight into the existing competitive scenario.
Some of the key statistics or factors impacting the corporate bond market in China covered in the report include, global market size, global corporate bond issuance, domestic market size, corporate bond investor profile, local currency credit spread, growing GDP of the Chinese economy, share of medium term notes (MTN) in total corporate bond issuance, corporate bo
Corporate Bond market is one of the fastest growing segments of the financial sector in China.
The report begins with a brief introduction on the various segments of the bond market in China followed by a further split of corporate bond segments. Evolution of the corporate bond market in China entails a brief description of the major events that have taken place since its inception. The market overview section provides an overview of the global corporate bond market in terms of issuance of corporate bonds and corporate bonds outstanding. This section also includes a snapshot of the corporate bond market in China covering the market size with forecast figures between 2009 and 2015. The section also provides information about the investor profiles of the corporate bond market in China.
Furthermore, the report delves into the credit spread between corporate bonds yield and benchmark government bonds yield spanning between various investment grades and tenor.
Key drivers of the industry explain the factors influencing the growth of the corporate bond market in China in detail. Some of them include growing economy of China, corporate bond market reforms and product innovation.
Major challenges that could impede the development and growth of the Chinese corporate bond market include inadequate credit rating system, impact of securitization, inadequate information disclosure and underdeveloped secondary bond market.
The government initiatives section includes a detailed description of the steps to be taken by the government of China in view of developing the corporate bond market under its 12th five year plan. This section also covers the major regulators of the corporate bond market alongwith key steps to be taken by them for the purpose of developing the corporate bond market in China.
Key emerging trends that are of marked importance to the corporate bond market in China include foreign participation and rise in market liquidity.
The report contains a brief analysis on the competitive landscape of the corporate bond market in China. This section provides a three dimensional analysis of the key corporate bond issuers’ revenues, profits and market capitalization followed by a ranking of companies based on the issuance volume of corporate bonds in China. The report also features brief profiles of the key corporate bond issuers in the market along with a snapshot of their corporation, financial performance and business highlights thus providing an insight into the existing competitive scenario.
Some of the key statistics or factors impacting the corporate bond market in China covered in the report include, global market size, global corporate bond issuance, domestic market size, corporate bond investor profile, local currency credit spread, growing GDP of the Chinese economy, share of medium term notes (MTN) in total corporate bond issuance, corporate bo
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Corporate Bond Market – China
February 2012
2
SAMPLE
CORPORATE BOND MARKET IN CHINA 2012.PPT
Executive Summary
Market
Drivers &
Challenges
Competition
�Global corporate bond market rose to USD x tr in 20-- from USD y tr in 20--
�Corporate bond market in China is expected to grow with a GAGR of z% to USD y bn in 20-- from USD x bn in 20--
�A and B dominate the share of investments in corporate bonds
Major Corporate Bond Issuers
Issuer 1 Issuer 2 Issuer 3 Issuer 4 Issuer 5 Issuer 6
Government Initiatives
�Structural reforms under the 12th Five Year Plan
�Supervisory Focus of NAFMII
�Corporate Bond Market Reforms and Regulations
�Offshore Investors Allowed Access to Interbank Market
Drivers:
� Low Market Penetration
� Reforms in Issuance Mechanism
� Product Innovation
Challenges:
• Inadequate Credit Rating System
• Impact of Securitization
• Inadequate Information Disclosure
• Underdeveloped Secondary Bond Market
Trends�Foreign Participation
�Rise in Market Liquidity
3
SAMPLE
CORPORATE BOND MARKET IN CHINA 2012.PPT
•Introduction
•Market Overview
• Global
• China
•Drivers & Challenges
•Credit Spread
•Government Initiatives
•Key Trends
•Key Bond Issuers
•Key Takeaway
4
SAMPLE
China’s Corporate Bond Market is divided into various
segments
Bond Market
P RQ U
Corporate Bonds
Source:
TS
b c d e f a
CORPORATE BOND MARKET IN CHINA 2012.PPT
A B
X Y Z
Issued
by
5
SAMPLE
Corporate Bond Market in China – Evolution
Source:
Year a Year gYear f
• Aaa
Year h
• Bbb
Year b
• Ccc
Year c Year d
• Ddd • Eee • Fff • Ggg
• Hhh
• Jjj
• Iii
CORPORATE BOND MARKET IN CHINA 2012.PPT
Note:
6
SAMPLE
Source:
Global corporate bond market grew with a CAGR of X%
between 20-- and 20--reaching USD Y trillion
• Corporate bonds are gradually emerging as a major
sector of the global bond market
• Global corporate bonds outstanding in 20-- was
worth USD x billion
• Issuance of corporate bonds registered more than y%
increase from 20-- amounting to USD z bn in 20--
• Developed economies accounted for the majority of
the corporate bond market growth
• Emerging markets accounted for a% of the total
issuance of corporate bonds in 20-- from b% in 20--
Global Corporate Bond Market – Overview Corporate Debt Outstanding
Corporate Bonds Issuance
CORPORATE BOND MARKET IN CHINA 2012.PPT
0
200
400
600
800
1,000
1,200
1,400
USD bn
X
20--
x2
20--
x1
0
50
100
150
200
tr
20--
C
a3
b3
c3d3
e3
20--
B
a2
b2
c2d2
e2
20--
A
a1
b1
c1d1
e1
EDCBA
7
SAMPLE
Source:
Corporate bond market in China is forecasted to witness
strong growth through 20--
• Corporate bond market is expected to grow with a CAGR of X% between 20-- and 20-- reaching USD y bn
• GDP of the economy is expected to grow from USD x bn in 20-- to USD y bn in 2015
• Corporate bonds accounted for y% and x% of GDP in 20-- and 20-- respectively and it is expected to grow to z% of GDP by 20--
• In 20--, out of the x biggest corporate bond sales in Asia y were Chinese companies
• State owned companies are the major issuers of the corporate bonds in China
• In 20--, y of the top x bond issuers were Z
• Supportive government policies have also contributed to the growth of the corporate bond market in China
• Among investor profiles, A remain the largest holders of corporate bonds with a share of x% as of June 20--
Corporate Bond Market – Overview Market Size and Growth
Corporate Bonds - Investor Profile
100%
0
1,000
2,000
3,000
USD bn
X%
20--e
x3
20--
x2
20--
x1
CORPORATE BOND MARKET IN CHINA 2012.PPT
0
20
40
60
80
100
%
20--
a2
b2
c2d2e2
20--
a1
b1
c1d1e1
EDCBA
8
SAMPLE
Drivers & Challenges – Summary
Drivers
Low Market Penetration
Reforms in Issuance Mechanism
Product Innovation
Impact of Securitization
Challenges
Inadequate Credit Rating System
Inadequate Information Disclosure
Underdeveloped Secondary Bond
Market
CORPORATE BOND MARKET IN CHINA 2012.PPT
9
SAMPLE
Growth in GDP of the Chinese economy presents a greater
opportunity for corporate bond market growth
•Finding 1
•Finding 2
•Finding 3
•Finding 4
Growing Chinese Economy Impact
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT
Corporate Bond GDP Share (20--)
0
20
40
60
80
100
120
%
Country 3
c1
Country 2
b1
Country 1
a1
0
2,000
4,000
6,000
8,000
10,000
12,000X%
20--e
x3
20--
x2
20--
x1
USD bn
Growth in GDP of China
10
SAMPLE
Reforms in issuance mechanism of corporate bonds paves
way for increasing issuance of bonds
• Finding 1
• Finding 2
• Finding 3
• Finding 4
• Finding 5
• Finding 6
Reforms in Issuance Mechanism Impact
Source:
Local Currency Corporate Bond Issuance
0
100
200
300
USD bnY%
20--
x4
20--
x3
20--
x2
20--
x1
CORPORATE BOND MARKET IN CHINA 2012.PPT
11
SAMPLE
Product Innovation in the form of medium term loans
led to rapid growth of corporate bond market
•Finding 1
•Finding 2
•Finding 3
•Finding 4
Product Innovation Impact
Source:
MTN- Share of Corporate Bond Issuance Issuance Volume of MTN - 2009
0
20
40
60
%
20--
y3
20--
y2
20--
y1 h1
g1 f1e1
d1
c1
b1
a1
H
G
F
E
D
C
B
A
CORPORATE BOND MARKET IN CHINA 2012.PPT
Aaa
12
SAMPLE
Absence of proper credit rating system acts as a hindrance
to the development of corporate bond market
• Finding 1
• Finding 2
• Finding 3
• Finding 4
Inadequate Credit Rating System Impact
Rating of Long Term Corporate Bonds
Classification Rating Credit Solvency Risk
X
Y
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT
13
SAMPLE
Summary – Trends
Foreign
Participation
Rise in Market
LiquidityTrends
CORPORATE BOND MARKET IN CHINA 2012.PPT
14
SAMPLE
Growth in the corporate bond market is enhanced by
improvement in market liquidity
• Finding 1
• Finding 2
• Finding 3
• Finding 4
Rise in Market Liquidity
Improvement in
market liquidity
enhances the
trading activity of
corporate bonds
Source:
Corporate Bond Turnover RatioCorporate Bond Trading Volume
0
200
400
600
800
USD bn
X%
20--
x3
20--
x2
20--
x1
0.0
0.5
1.0
1.5
2.0
Absolute
20--
a4
20--
a3
20--
a2
20--
a1
CORPORATE BOND MARKET IN CHINA 2012.PPT
15
SAMPLE
Ranking – Top Corporate Bond Issuers
Source:
Top 30 Companies – In Terms of Bond Issuance
CORPORATE BOND MARKET IN CHINA 2012.PPT
Top 30 Players – In Terms of Bond Issuance (March 20--)
Issuer 3030Issuer 1515
Issuer 2929Issuer 1414
Issuer 2828Issuer 1313
Issuer 2727Issuer 1212
Issuer 2626Issuer 1111
Issuer 2525Issuer 1010
Issuer 2424Issuer 99
Issuer 2323Issuer 88
Issuer 2222Issuer 77
Issuer 2121Issuer 66
Issuer 2020Issuer 55
Issuer 1919Issuer 44
Issuer 1818Issuer 33
Issuer 1717Issuer 22
Issuer 1616Issuer 11
Company NameRankBond IssuerRank
16
SAMPLE
-2
0
2
4
6
8
10
12
14
16
18
20
22
24
26
28
30
Revenue
33080706050403020100
h
g
a
b
d
c
f
e
32031030029028027026025024023022021020019018017016015014013012011010090
Net Income
Major Domestic Corporate Bond Issuers – Financial Health
Summary (1/2)
Source:
Size of the Bubble represents Market Capitalization
Issuer 8
Issuer 7
Issuer 6
Issuer 5
Issuer 4
Issuer 3
Issuer 2
Issuer 1
CORPORATE BOND MARKET IN CHINA 2012.PPT
17
SAMPLE
Domestic Corporate Bond Issuers – Summary (2/2)
Source:
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36
Issuer10 x10
Issuer 9 x9
Issuer 8 x8
Issuer 7 x7
Issuer 6 x6
Issuer 5 x5
Issuer 4 x4
Issuer 3 x3
Issuer 2 x2
Issuer 1 x1
USD bn
Major 10 companies – Bond Issuance
CORPORATE BOND MARKET IN CHINA 2012.PPT
18
SAMPLE
Major Domestic Players in the Market (1/18)
• Company engages in the production and distribution of metal materials, sale of general machinery and equipment, of
nonferrous metals and electricity
• Sales of the company amounted to USD x bn in 20-- and the total assets of the company amounted to USD y bn
• Long term corporate bonds amounting to USD y bn was issued by the company in 20--
• Proceeds from the issuance of bonds will be utilized by the company to optimize the debt structure and raise funds fir the working
capital
Source:
Headquarters City 1, Country 1
Founded 20--
Products Product 1, Product 2, Product 3
Key People Person 1 - Designation
Company Snapshot: Issuer 1
Business Highlights
Corporate Information Financial Performance
Profit / Loss
Revenue
0
5,000
10,000
15,000
20,000
-1,000
-500
0
500
1,000
1,500
2,000
20--
x4
20--
Profit
USD mn
Revenue
USD mn
x3x2
20--20--
x1
CORPORATE BOND MARKET IN CHINA 2012.PPT
19
SAMPLE
Corporate bond market in China is poised to realize
significant growth through 20--
Corporate Bond market of China is expected to grow at a CAGR of X% between 20-- and 20--
Rise in issuance of
corporate bonds
following issuance
reform gave a major
boost to the corporate
bond market
Opportunities in the
MarketMarket Size
Government
Initiatives
Challenges
Product innovation in
form of medium term
notes is expected to set
the growth path of the
corporate bond market in
China
Rise in both liquidity and
foreign participation will
lead to an expansion of
the corporate bond
market in China
• Inadequate Credit Rating System
• Inadequate Information Disclosure
• Underdeveloped Secondary Bond Market
12th Five Year Plan of
the government
focuses on measures
to boost the
corporate bond
market
NAFMII, CBRC and
CIRC have taken
numerous initiatives
to develop the
corporate bond
market in China
In order to develop
the market offshore,
investors are allowed
to issue bonds in the
Interbank market
CORPORATE BOND MARKET IN CHINA 2012.PPT
0
1,000
2,000
3,000
USD bn
x3
20--20--
x1
X%
x2
20--e
20
Thank you for the attention
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CORPORATE BOND MARKET IN CHINA 2012.PPT
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