Bank issuing bonds to "replenish blood" with a thickening balance sheet: structural differentiation behind 986 billion yuan

Since the second quarter, the issuance of Tier 2 capital bonds and perpetual bonds by banks has suddenly accelerated. As of June 17th, the total issuance size reached 986 billion yuan, an increase of over 60% year-on-year, with average issuance rates dropping to below 2%. In contrast to the expansion in size, the number of issuers has not increased but actually decreased, showing significant structural differentiation. State-owned large banks and national joint-stock banks are taking advantage of the low interest rate opportunity to issue bonds intensively, while city commercial banks have almost stopped issuing bonds and rural commercial banks are collectively absent. Industry insiders believe that this differentiation trend not only reflects the intensification of market credit stratification, but also reflects the policy orientation of regulatory authorities in resolving risks in small and medium-sized financial institutions. It is expected that the issuance size of Tier 2 capital bonds and perpetual bonds for the whole year will remain high, and the gap between institutions will further widen.