For the complete report, get in touch with us at : info@netscribes.com 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

1. Corporate Bond Market – China
February 2012

2. Executive Summary
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
Market USD x bn in 20--
A and B dominate the share of investments in corporate bonds
Drivers: Challenges:
LE
Drivers & Low Market Penetration • Inadequate Credit Rating System
Reforms in Issuance Mechanism • Impact of Securitization
Challenges
Product Innovation
MP •
•
Inadequate Information Disclosure
Underdeveloped Secondary Bond Market
Government
Initiatives
SA
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
Foreign Participation
Trends Rise in Market Liquidity
Major Corporate Bond Issuers
Competition
Issuer 1 Issuer 2 Issuer 3 Issuer 4 Issuer 5 Issuer 6
CORPORATE BOND MARKET IN CHINA 2012.PPT 2

3. •Introduction
•Market Overview
• Global
LE
• China
P
•Drivers & Challenges
M
SA
•Credit Spread
•Government Initiatives
•Key Trends
•Key Bond Issuers
•Key Takeaway
CORPORATE BOND MARKET IN CHINA 2012.PPT 3

4. China’s Corporate Bond Market is divided into various
segments
Bond Market
A B
PLE Y Z
M
X
SA
Corporate Bonds
P Q R S T U
Issued
a b c d e f
by
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 4

5. Corporate Bond Market in China – Evolution
• Hhh • Iii
Year b Year c
PLE Year d Year f Year h
M
Year a Year g
• Aaa • Bbb • Ccc SA • Ddd • Eee • Fff • Ggg
• Jjj
Source: Note:
CORPORATE BOND MARKET IN CHINA 2012.PPT 5

6. Global corporate bond market grew with a CAGR of X%
between 20-- and 20--reaching USD Y trillion
Global Corporate Bond Market – Overview Corporate Debt Outstanding
• Corporate bonds are gradually emerging as a major tr
200
sector of the global bond market A B C
150 e1 e2 e3 d3
d1 d2
c2 c3
• Global corporate bonds outstanding in 20-- was 100 c1
LE
b1 b2 b3
50
worth USD x billion a1 a2 a3
0
P
• Issuance of corporate bonds registered more than y%
M
increase from 20-- amounting to USD z bn in 20--
20--
A B
20--
C D E
20--
the corporate bond market growth
SA
• Developed economies accounted for the majority of
• Emerging markets accounted for a% of the total
Corporate Bonds Issuance
USD bn
1,400 X x2
issuance of corporate bonds in 20-- from b% in 20--
1,200
1,000
x1
800
600
400
200
0
20-- 20--
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 6

7. Corporate bond market in China is forecasted to witness
strong growth through 20--
Corporate Bond Market – Overview Market Size and Growth
• Corporate bond market is expected to grow with a USD bn
CAGR of X% between 20-- and 20-- reaching USD y bn 3,000 x3
• GDP of the economy is expected to grow from USD x X%
bn in 20-- to USD y bn in 2015 2,000
LE
• Corporate bonds accounted for y% and x% of GDP in
1,000 x2
20-- and 20-- respectively and it is expected to grow x1
to z% of GDP by 20--
• In 20--, out of the x biggest corporate bond sales in
Asia y were Chinese companies
MP 0
20-- 20-- 20--e
• In 20--, y of the top x bond issuers were Z
• Supportive government policies have also
SA
• State owned companies are the major issuers of the
corporate bonds in China
Corporate Bonds - Investor Profile
100
%
e1 d1 e2 d2
contributed to the growth of the corporate bond 80 c1 c2 100%
market in China 60 b1 b2
• Among investor profiles, A remain the largest holders 40
of corporate bonds with a share of x% as of June 20-- a1 a2
20
0
20-- 20--
A B C D E
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 7

8. Drivers & Challenges – Summary
Challenges
LE
Inadequate Credit Rating System
Drivers
Low Market Penetration
MP Impact of Securitization
Reforms in Issuance Mechanism
Product Innovation
SA Inadequate Information Disclosure
Underdeveloped Secondary Bond
Market
CORPORATE BOND MARKET IN CHINA 2012.PPT 8

9. Growth in GDP of the Chinese economy presents a greater
opportunity for corporate bond market growth
Growing Chinese Economy Impact
•Finding 1
•Finding 2
•Finding 3
•Finding 4
PLE
USD bn
Growth in GDP of China
SAM %
Corporate Bond GDP Share (20--)
12,000 x3 120 c1
X%
10,000 100
8,000 80
x2
6,000 x1 60
4,000 40 b1
2,000 20 a1
0 0
20-- 20-- 20--e Country 1 Country 2 Country 3
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 9

10. Reforms in issuance mechanism of corporate bonds paves
way for increasing issuance of bonds
Reforms in Issuance Mechanism Impact
• Finding 1
• Finding 2
• Finding 3
• Finding 4
LE
• Finding 5
• Finding 6
MP
SA
Local Currency Corporate Bond Issuance
USD bn
Y%
300 x3
x4
200
x2
100 x1
0
20-- 20-- 20-- 20--
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 10

11. Product Innovation in the form of medium term loans
led to rapid growth of corporate bond market
Product Innovation Impact
•Finding 1
•Finding 2
•Finding 3
LE
•Finding 4
MP
MTN- Share of Corporate Bond Issuance
%
Aaa SA Issuance Volume of MTN - 2009
a1 A E
B F
60
C G
y2 b1
y3 D H
40
y1 h1
20 c1
d1
0 e1
20-- 20-- 20-- g1 f1
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 11

12. Absence of proper credit rating system acts as a hindrance
to the development of corporate bond market
Inadequate Credit Rating System Impact
• Finding 1
• Finding 2
• Finding 3
• Finding 4
PLE
Classification Rating
AM
Rating of Long Term Corporate Bonds
S Credit Solvency Risk
X
Y
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 12

13. Summary – Trends
PLE
SAM
Foreign Rise in Market
Participation Trends Liquidity
CORPORATE BOND MARKET IN CHINA 2012.PPT 13

14. Growth in the corporate bond market is enhanced by
improvement in market liquidity
Rise in Market Liquidity
• Finding 1 Improvement in
market liquidity
• Finding 2 enhances the
• Finding 3 trading activity of
corporate bonds
LE
• Finding 4
MP
800
USD bn
S
x3
A
Corporate Bond Trading Volume Corporate Bond Turnover Ratio
Absolute
2.0
X% a2
a3 a4
600 1.5
x2
a1
400 1.0
x1
200 0.5
0 0.0
20-- 20-- 20-- 20-- 20-- 20-- 20--
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 14

15. Ranking – Top Corporate Bond Issuers
Top 30 Companies – In Terms of Bond Issuance
Top 30 Players – In Terms of Bond Issuance (March 20--)
Rank Bond Issuer Rank Company Name
1 Issuer 1 16 Issuer 16
LE
2 Issuer 2 17 Issuer 17
P
3 Issuer 3 18 Issuer 18
4 Issuer 4 19 Issuer 19
5
6
7
Issuer 5
Issuer 6
Issuer 7
SAM 20
21
22
Issuer 20
Issuer 21
Issuer 22
8 Issuer 8 23 Issuer 23
9 Issuer 9 24 Issuer 24
10 Issuer 10 25 Issuer 25
11 Issuer 11 26 Issuer 26
12 Issuer 12 27 Issuer 27
13 Issuer 13 28 Issuer 28
14 Issuer 14 29 Issuer 29
15 Issuer 15 30 Issuer 30
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 15

16. Major Domestic Corporate Bond Issuers – Financial Health
Summary (1/2)
Net Income
Size of the Bubble represents Market Capitalization
30
28
26 a
24
22 g
LE
b
20
P
18
16 c
d
M
14
A
12
h
S
10
8
6
4
e
2
0 f
-2 Revenue
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 260 270 280 290 300 310 320 330
Issuer 1 Issuer 3 Issuer 5 Issuer 7
Issuer 2 Issuer 4 Issuer 6 Issuer 8
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 16

17. Domestic Corporate Bond Issuers – Summary (2/2)
Major 10 companies – Bond Issuance
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36
USD bn
Issuer 1 x1
LE
Issuer 2 x2
Issuer 3
Issuer 4
MP x3
x4
Issuer 5
Issuer 6
Issuer 7
SA x7
x5
x6
Issuer 8 x8
Issuer 9 x9
Issuer10 x10
Source:
CORPORATE BOND MARKET IN CHINA 2012.PPT 17

18. Major Domestic Players in the Market (1/18)
Company Snapshot: Issuer 1
Corporate Information Financial Performance
Revenue
Headquarters City 1, Country 1 Revenue Profit
USD mn Profit / Loss USD mn
20,000 x4 2,000
Founded 20--
LE
x1 1,500
15,000
x2 x3 1,000
Products Product 1, Product 2, Product 3
Key People Person 1 - Designation
MP 10,000
5,000
500
0
-500
A
0 -1,000
S
20-- 20-- 20-- 20--
Business Highlights
• 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:
CORPORATE BOND MARKET IN CHINA 2012.PPT 18

19. 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--
Opportunities in the Government
Market Size
Market Initiatives
USD bn
Rise in issuance of 12th Five Year Plan of
LE
3,000 x3
corporate bonds the government
X%
P
following issuance focuses on measures
2,000
reform gave a major to boost the
M
boost to the corporate corporate bond
1,000 x2
A
bond market x1 market
Product innovation in
form of medium term
notes is expected to set
the growth path of the
0
S
20-- 20-- 20--e
NAFMII, CBRC and
CIRC have taken
numerous initiatives
to develop the
corporate bond market in corporate bond
China Challenges market in China
Rise in both liquidity and • Inadequate Credit Rating System In order to develop
foreign participation will the market offshore,
• Inadequate Information Disclosure
lead to an expansion of investors are allowed
the corporate bond • Underdeveloped Secondary Bond Market to issue bonds in the
market in China Interbank market
CORPORATE BOND MARKET IN CHINA 2012.PPT 19

20. Thank you for the attention
Corporate Bond Market - China report is a part of Netscribes’ Financial Services Industry Series.
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CORPORATE BOND MARKET IN CHINA 2012.PPT 20