Banks cannot help enterprises to issue bonds. Corporate bonds are approved by the National Development and Reform Commission and are applicable to unlisted enterprises. Pure real estate companies and financial institutions such as banks, securities and funds cannot apply. But banks can issue subordinated bonds, but not corporate bonds.
Although securities underwriting is the most primitive and basic business activity of investment banks. But banks can't help enterprises issue bonds. Investment banks have a wide range of underwriting rights, including bonds issued by the central government, local governments and government agencies, stocks and bonds issued by enterprises, securities issued by foreign governments and companies at home and abroad, and securities issued by international financial institutions. In the process of underwriting, investment banks generally have to weigh whether to form an underwriting syndicate and choose the underwriting method according to the underwriting amount and risk.
When handling bond underwriting business, banks will have requirements for bond issuers, including credit rating and industry category. Professional rating agencies with AAA or above rating structure and industries supported by national policies will be more favored by underwriters and market investors. However, the competition in the direct financing market is increasingly fierce, and the bond yields of different credit ratings and different industry categories are quite different. Commercial banks rely on strong financial strength and strong risk tolerance to pursue high returns. Second, they choose bond issuers with low credit ratings and eliminate backward industries. The bond underwriting business of some commercial banks is not included in the unified credit management, which leads to the suspension of the credit risk of bond underwriting business.
What is a bond?
Bond is a kind of financial contract, which is a creditor's right and debt certificate issued to investors when the government, financial institutions and industrial and commercial enterprises directly borrow money from the society and promise to pay interest at a certain interest rate and repay the principal according to the agreed conditions. The essence of a bond is a certificate of debt, which has legal effect. There is a creditor-debtor relationship between bond buyers or investors and issuers. Bond issuers are debtors and investors (bond buyers) are creditors. Bond is a valuable security. Because the interest of bonds is usually determined in advance, bonds are a kind of fixed-interest securities. In countries and regions with developed financial markets, bonds can be listed and circulated. In China, the typical government bonds are short-term treasury bills.