On March 30, Inner Mongolia successfully issued 20 billion yuan of special bonds for small and medium-sized banks, raising funds to support 26 small and medium-sized banks in replenishing capital. Recently, Heilongjiang, Guangxi, and other places have successively disclosed the progress of special bonds for small and medium-sized banks. Industry insiders believe that small and medium-sized banks have relatively limited channels for capital replenishment, and the pressure on capital replenishment is high. The special bonds of small and medium-sized banks will further play a role in supplementing capital. Since this year, 34 billion yuan has been issued. According to the news released on March 30 on the China Bond Information Network, the Department of Finance of the Inner Mongolia Autonomous Region has publicly issued the special bond of the Inner Mongolia Autonomous Region to support the development of small and medium-sized banks in 2023 (Phase I) - the special bond of the Inner Mongolia Autonomous Region government in 2023 (Phase I). The bidding has been completed on March 30, 2023. The bidding results show that the actual issuance scale of the bonds is 20 billion yuan, the issuance period is 10 years, and the coupon rate is 3.01%. According to the relevant issuance announcement, the funds raised from the bonds are intended to be used for the capital replenishment projects of 26 small and medium-sized banks in Inner Mongolia. In addition to Inner Mongolia, Heilongjiang and Dalian have successfully issued special bonds for small and medium-sized banks since this year. On March 16th, Heilongjiang issued 10 billion yuan of special bonds for small and medium-sized banks, which will be used for the capital replenishment project of Harbin Bank. On February 27th, Dalian issued 4 billion yuan of special bonds for small and medium-sized banks, all of which will be used to replenish the capital of the Bank of Dalian. Since this year, the total issuance scale of special bonds of small and medium-sized banks has reached 34 billion yuan. In addition, there are many disclosures about the proposed issuance of special bonds for small and medium-sized banks, but the specific issuance time has not yet been specified. Guangxi plans to issue 8.4 billion yuan of special bonds for small and medium-sized banks to supplement capital for 21 small and medium-sized banks. Hebei Provincial Department of Finance disclosed that in January 2023, with the consent of the State Council, the Ministry of Finance issued a new special debt limit of 15 billion yuan to the province to mitigate the risks of local small and medium-sized banks, which is proposed to be included in the provincial early budget for 2023 and all of them will be loaned to cities and counties for use. Compared to large banks, small and medium-sized banks have limited channels for capital replenishment, relatively low capital adequacy ratios, and high pressure on capital replenishment. According to the data disclosed by the China Banking and Insurance Regulatory Commission, as of the fourth quarter of 2022, the capital adequacy ratio of urban commercial banks was 12.61%, while that of rural commercial banks was 12.37%, which was lower than the capital adequacy ratio of large commercial banks and joint-stock banks. Li Qinghe, the chief analyst of fixed income at Huafu Securities, believes that for small and medium-sized banks, there are certain difficulties in capital replenishment methods such as "profit conversion", IPO, additional issuance, equity placement, convertible bonds, and issuance of preferred shares. Perpetual bonds and tier 2 capital bonds are currently the most widely used and convenient and efficient capital replenishment methods for small and medium-sized banks, which can be used to supplement other tier 1 and tier 2 capital of banks, Currently, there is a certain market volume. However, since this year, banks such as Yantai Rural Commercial Bank, Anhui Taihe Agricultural Commercial Bank, and Yingkou Bank have issued announcements that they will not exercise the option to redeem Tier 2 capital bonds. According to CICC's research report, if banks do not redeem Tier 2 capital bonds, it may indicate that their capital adequacy ratio is low and it is difficult to renew them. In the context of limited capital replenishment channels, special bonds of small and medium-sized banks