With abundant market liquidity and policy support, the issuance of small and micro financial bonds by Chinese banks surged 330% to RMB 275.28 billion ($38.74 billion) in the first five months of 2020, reported Caixin.
The largest issuers include Industrial Bank, Bank of Beijing, Ping An Bank and China Citic Bank, all of which issued such bonds for the first time.
The surge of issuance was spurred by a series of policies to help small businesses weather the pandemic. The State Council said at a cabinet meeting March 31 that the government would support financial institutions in the issuance of RMB 300 billion of financial bonds targeting small enterprises.
Funds raised from such bonds are exclusively used for lending to small and micro businesses. Medium to small-sized banks are usually the main issuers of such bonds. Due to the high risks of microloans, the interest rates of small and micro financial bonds used to be relatively high.