(Yicai) Aug. 15 -- China Minsheng Bank has terminated a plan, six years in the making, to raise as much as CNY50 billion (USD6.9 billion) through a convertible bond sale.

The bank made the decision after careful analysis and consideration of the capital market environment, Shenzhen-based CMB said on Aug. 11.

Other listed financial firms such as Central China Securities and China Fortune have also terminated fundraising plans since the end of last month. Coupled with the slowing pace of initial public offerings in China, some market commentators predict a squeeze on refinancing by these firms.

The amount CMB aimed to raise was huge, but the secondary market has limited capacity at the moment, an employee working on the bank’s investor hotline told Yicai, adding that the plan was initiated a long time ago and is not suited to the current market conditions.

The bank may unveil other financing plans in the future, the person noted.

The Shanghai Stock Exchange accepted CMB’s convertible bond proposal in March, the bank said. Before CMB withdrew its application, the bourse had made two rounds of inquiries, mainly focusing on issues like real estate loan risks, the need for such a large fundraiser, operating conditions, compliance, and issuance pricing.

Shares of China Minsheng Banking [SHA: 600016] rose 2.8 percent to close at CNY3.99 (55 US cents) apiece today, giving it a market capitalization of about CNY162 billion (USD22.4 billion). In the eyes of industry insiders, market sentiment is not high and the valuation is low, which is not conducive to the financing plans of listed companies and their shareholders.

In response to the refinancing behavior of securities companies, the China Securities Regulatory Commission asked them in January to focus on their main businesses and take a new path of capital-saving and high-quality development.

No listed broker has gained approval for a private placement of shares this year, and two recently withdrew their applications. Almost 10 brokerages await approval for their private placement plans.

From 2020 to 2022, Chinese mainland-listed brokers raised a total of CNY269.5 billion in 38 fundraisers, per statistics from data provider Wind Information.

Securities companies must be careful about refinancing since their business has softened, and they will likely go to the market more if performance picks up, an industry insider told Yicai, predicting more brokerages will pull their refinancing plans this year.

Editor: Peter Thomas