China's inter-bank bond market is tight. The official seal documents show that many corporate bond issuances from Guangzhou, Jiangsu, Henan, Shandong, Beijing, Chongqing, Hubei and other places have failed.

Xuzhou High-tech Industrial Development Zone State-owned Assets Management Co., Ltd. disclosed on 20 December 2021 that it would issue 250 million yuan of the second phase of 2021 ultra-short-term financing bonds with a maturity of 75 days on December 21. It claimed to cancel the issuance due to the volatility of the bond market.

However, from a macroeconomic perspective,  Jinping Xi’s regime focused its energy on centralizing power and abolishing local tax bureaus. All tax revenues were collected by the State Taxation Bureau and Customs, which implement the vertical management of the central government. The Xi Jinping regime also cut the salaries of ordinary civil servants and increased the salaries of Xi Jinping’s intelligent agencies who have nothing to do with value creation such as the military and emergency management. Ordinary civil servants will have more motivation to use their power to rob the local economy. As a result, investors in the inter-bank bond market are not optimistic about the cash flow of some local state-owned enterprises.

The debt problems of companies such as Fantasia and Evergrande have increased risk aversion in the market, and may also affect bond investors' credit risk, systemic risk measurement and related pricing. A debt default event with a large impact will not only quantitatively affect the calculation of the expected debt default loss rate (the expected debt default loss rate is affected by the expected debt default rate + the expected loss at the time of the default. It is necessary to refer to actual factors and also to consider the historical loss rate), it will also affect risk sentiment and affect the price of risk.

In addition, the December 2021 meeting of the Federal Reserve Board of the United States decided to reduce the balance sheet and raise interest rates at the same time. The Fed rate is the basis for pricing in all financial markets in the world. Participants in the inter-bank bond market can only be more cautious and would rather take more time to look at it. The financial statements of the invested companies are not willing to take the risk of losing liquidity and huge credit risk losses. After reading the financial statements of several local state-owned enterprises that issued bonds in the inter-bank bond market, it is common that the cash flow from operating activities is negative or the cash flow from operating activities is less than the cash outflow of interest payments, and the remuneration of key management personnel is generally concealed, and the non-disclosure is also under government control. Related party transactions between the bank and the company, concealing related party transactions such as land allocation and transfer between the government and the company, and the decline in inventory turnover days.

When reading the financial statements of state-owned enterprises of the Communist Party of China, it was also found that the financial statements of China National Nuclear Corporation had been issued by audit institutions for many consecutive years. The parent company of the Industrial Group and some of its subsidiaries are involved in state secrets, and the internal audit agency of China National Nuclear Corporation will carry out the audit work). However, the Chinese Communist Party's financial institutions still grant hundreds of billions of yuan in credit, and China National Nuclear Corporation has not disclosed in its financial statements the related party transactions of the Chinese Communist Party's financial institutions in terms of credit, underwriting bonds, and providing deposit services. China National Nuclear Corporation's 2020 financial statements must have material misstatements.

The financial statements of some state-owned enterprises show that the cash flow of operating activities and the cash flow of investment activities are both negative, and the cash flow of financing activities is positive, which means that debt repayment, investment and daily operations rely on borrowing, debt issuance or stock issuance. Some state-owned enterprises listed the unrecognized financing costs of financial leases to other non-current assets, which should have been listed as a reduction in long-term payables or lease liabilities.

Guangzhou Development Zone Investment Group Co., Ltd. disclosed on December 15, 2021 that the first phase of 2021 ultra-short-term financing bonds with a maturity of 270 days from December 16 to December 17, 2021 was 500 million yuan. It claims that in view of recent market changes, the company canceled the issuance of ultra-short-term financing bonds.

The 2020 financial statements of Guangzhou Development Zone Investment Company, which have been audited and signed and sealed by the management, show that the net cash flow of operating activities in 2019 and 2020 is 27 million yuan and -741 million yuan, but dividends, profits or interest payments are paid The cash of 205 million and 331 million respectively, it is obvious that the cash flow from operating activities is not enough to pay the debt interest. The related party transaction of key management personnel remuneration was not disclosed; the interest expense for 2019 and 2020 listed in the consolidated income statement is 0, which is inconsistent with the interest expense of 215 million and 325 million listed in the notes; increase of land use rights by 10.55 million yuan in 2020 , As a state-owned enterprise, it is likely that it has not disclosed related party transactions such as land transfer with the government (the note does not clarify whether the increase in land is purchased from an independent third party in the market); the capital contribution of not less than 1 billion yuan is included in other non-current assets , Did not explain the reason; in the long-term deferred expenses, the reconstruction project and the maintenance project are suspected of double accounting.

State-owned enterprises in the long-term deferred cost accounting reconstruction project are likely to fail to confirm the value of the replaced part of the asset when replacing the old fixed asset components, resulting in double accounting, which means that the depreciation and amortization expenses are both wrong; Internationally, it is usually listed in fixed assets and other fixed assets that have been repaired or transformed. According to fixed assets with different service lives or investment real estate, the possibility of double accounting is less.

Kaifeng City Operation Investment Group Co., Ltd. disclosed on December 14, 2021 that it is scheduled to issue a 1.5-year 2021 second-phase medium-term note of 600 million yuan from December 16, 2021 to December 17, 2021, claiming that due to recent market fluctuations Larger, cancel the issuance of medium-term notes in this period.

Shandong Public Holding Co., Ltd. disclosed on December 13, 2021 that the basic issuance amount was RMB 0 million from December 15 to December 16, 2021, and the maximum issuance amount was RMB 500 million, and the short-term financing bills with a term of 1 year were disclosed. On December 17th, it claimed that in view of the recent market volatility, the face price was lower than expected, and the issuance was cancelled.

Companies that have recently cancelled bond issuance include: Huangshi Cihu High-tech Development Co., Ltd., Beijing Energy Group Co., Ltd., Chongqing Sanfeng Environmental Group Co., Ltd., Huainan Industrial Development (Group) Co., Ltd., Jinzhou Port Co., Ltd., Huai'an State-owned United Investment Development Group Co., Ltd., Huai'an Baima Lake Investment Development Co., Ltd., Jiangsu Xianxing Holding Group Co., Ltd., Ningxiang City Cultural Tourism Investment Co., Ltd., Bengbu High-tech Investment Group Co., Ltd., Tianma Microelectronics Co., Ltd., Poly Cultural Group Co., Ltd., etc.