China's contractor banks have been trusted for nearly a month. Originally, they were only concerned about the development of the interbank business of small and medium-sized banks, but eventually they became the credit crisis of small and medium-sized non-bank institutions. The reason is that over the years, some institutions have been too radical in leveraged investment credit bonds, and accumulated risks have been triggered after the contractor incident. At present, the trend of credit contraction has been completed, and non-bank institutions will face a painful passive process of leverage reduction.
Market participants pointed out that the crisis will lead to the future of credit bonds through credit rating and liquidity to re-price, credit spreads will expand, and the attractiveness of high-grade credit bonds will further increase.
They also believe that although the leveraged investment credit bond model commonly used by non-bank institutions is expected to continue, its scale will shrink passively and the investment structure will be adjusted; after the breakdown of the comfort model, the differentiation between non-bank institutions and the bond market itself will intensify, and the head securities firms'advantage of grasping the core research capacity will become more prominent.
"Normal leveraging and coupon-eating strategies should still exist, but products that finance low-rated companies through structured products should be slowly reduced." A bond fund investment manager in South China pointed out.
Li Qilin, chief economist of Lianhe Securities, believes that the investment behavior and position of non-bank institutions may be adjusted in the future, which will be more inclined to high-rated securities, and the allocation demand for low-rated bonds may decline.
Traders also said that for the less qualified stock credit bonds, follow-up institutions will try their best to deal with them; for the incremental part, institutions will also strictly control risks in the future. On the one hand, it will raise the threshold of securities warehousing, on the other hand, it will raise the risk premium level, and the difficulty of issuing credit bonds at the first level will also be greatly increased.
In addition, from the point of view of various institutions, institutions with strong investment capacity can also obtain excess returns by picking up credit bonds, and the weak investment capacity may be eliminated by the market.
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