(Yicai) Aug. 15 -- Chinese corporate bond issuance has jumped 23 percent so far in 2023 from a year earlier on the back of increased sales by private businesses, especially among those with lower credit ratings, according to a media report.

As of yesterday, firms have raised CNY2.34 trillion (USD323.1 billion) via bonds this year, Securities Daily reported today, citing iFinD, a data terminal of Hithink RoyalFlush Information Network. As companies with lower credit ratings issued bonds, sales by AA-rated businesses rose nearly 62 percent from a year ago.

Issuance will continue to rise in the second half, and the ratings of issuers will be further downgraded to mid and low grades, said Ming Ming, chief economist at Citic Securities Research Institute, according to the report. Bonds sold by AA-rated firms will keep climbing, and scientific and technological innovation companies will stay active, Ming added. 

Most of the corporate bond issuers were rated AA+, making up almost 78 percent of the total by value, despite falling from 83 percent. AA-rated firms constituted almost 22 percent, up from 16.4 percent.

A bigger share of the total was offered to specific investors. Private placements amounted to CNY1.46 trillion, an almost 54 percent jump, whereas public placements tallied CNY876.8 billion (USD121.1 billion), a 7 percent decline. Public placements have stricter rules.

The bonds publicly offered were mainly sold by industrial firms, said Zhang Qi, senior researcher at CSCI Pengyuan, according to Securities Daily. Demand for bonds issued by such companies has fallen in recent years, he said, adding that private placements surged mainly because of the large amount of private corporate bonds coming due and the low comparative base last year.

Many businesses with lower credit ratings issued bonds amid operational pressures and regulators have eased restrictions on bond sales to enable more firms to secure direct financing, per Ming.

At CNY172.1 billion, the main issuers of specific corporate bonds, those with special maturity, interest rate, and repayment arrangements, were scientific and tech innovation firms. They have a great need for financing and China very much supports their development and fundraising efforts, creating a sound policy environment for them to issue bonds, Ming said.

Editor: Emmi Laine