Gf Securities has been heavily engaged in debt issuance activities since the beginning of 2026, with the company (as the debt issuer) releasing numerous announcements related to bond offerings.

Recently, Gf Securities announced that its cumulative new borrowings for the year had exceeded 40% of its net assets at the end of the previous year, breaching the so-called "red line" under the old version of the Administrative Measures for the Issuance and Trading of Corporate Bonds. In recent years, Gf Securities' interest-bearing debt has continued to grow significantly, accounting for a proportion of total liabilities that is 6 to 11 percentage points higher than that of Huatai Securities. Furthermore, Gf Securities has already received approval to issue an additional 110 billion yuan in bonds, suggesting that its interest-bearing debt may rise substantially in the future, further increasing its leverage.

In January, Gf Securities also raised over HKD 6.1 billion through an H-share placement and the issuance of offshore convertible bonds, with all proceeds intended for the development of its international business. However, the company's overseas business revenue remains minimal, accounting for less than 5% in 2024 and only 7.4% in the first half of 2025.

The proportion of cumulative bond balance has already touched the "old red line," yet the company continues to issue debt despite years of growth in interest-bearing liabilities.

Since the start of 2026, Gf Securities has been consistently issuing bonds.

On the evening of February 5, Gf Securities announced that as of December 31, 2025, the company's outstanding borrowings amounted to 475.643 billion yuan. By January 31, 2026, this figure had risen to 552.4 billion yuan, representing a cumulative increase in borrowings of 76.757 billion yuan, or 47.24% of the net assets at the end of the previous year—exceeding the 40% threshold.

Under the old Administrative Measures for the Issuance and Trading of Corporate Bonds, a cumulative bond balance exceeding 40% of net assets prohibited public issuance of corporate bonds. Therefore, Gf Securities has breached this "old red line." The revised version of the measures has removed this stipulation, instead emphasizing reasonable debt-to-asset structures.

The question remains whether Gf Securities' current liability structure is reasonable. At the end of 2022, 2023, 2024, and the first three quarters of 2025, the company's total interest-bearing debt stood at 301.881 billion yuan, 332.184 billion yuan, 365.519 billion yuan, and 457.481 billion yuan, respectively, accounting for 61.30%, 61.34%, 60.35%, and 57.63% of total liabilities.

It is evident that Gf Securities' interest-bearing debt has grown year after year, with a notable 25% increase in the first three quarters of 2025 compared to the end of 2024.

During the same periods, Huatai Securities reported interest-bearing debt balances of 345.986 billion yuan, 385.987 billion yuan, 303.827 billion yuan, and 423.336 billion yuan, representing 50.98%, 53.37%, 48.82%, and 51.60% of total liabilities, respectively—6 to 11 percentage points lower than Gf Securities.

Moreover, as of January 30, 2026, Gf Securities had received approval to issue an additional 113.24 billion yuan in bonds that have not yet been issued. If these bonds are successfully placed, the company's interest-bearing debt will rise significantly, further increasing its leverage and raising questions about the sustainability of its debt structure.

Among the approved but unissued bonds, subordinated debt accounts for 21.67 billion yuan. Investors may question why the company is issuing new debt when it already has a substantial amount of unused issuance quota.

Over 80% of interest-bearing debt matures within one year.

At the end of the first three quarters of 2025, Gf Securities' interest-bearing debt due within one year amounted to 372.301 billion yuan, accounting for 46.9% of total liabilities and 81.38% of total interest-bearing debt—exceeding 80%.

In comparison, Huatai Securities reported interest-bearing debt due within one year of 333.481 billion yuan, representing 78.77% of its total interest-bearing debt—lower than Gf Securities.

Breaking down Gf Securities' interest-bearing debt structure, securities sold under agreements to repurchase accounted for the largest portion, reaching 207.824 billion yuan by the end of the first three quarters of 2025, or 45% of the total. This category also falls under interest-bearing debt due within one year, representing 55.82% of such debt during the same period.

At the end of the first three quarters of 2025, Huatai Securities' securities sold under agreements to repurchase accounted for 38.38% of its total interest-bearing debt, lower than Gf Securities' 45%.

Some analysts argue that while securities sold under agreements to repurchase serve as a vital short-term funding tool for securities firms, a high proportion of such liabilities also represents a significant risk. This financing model supports business expansion but tightly binds the company to short-term funding channels. If short-term debt cannot be rolled over, liquidity risks may emerge. Additionally, a decline in collateral value could trigger margin calls or even forced liquidations.

Furthermore, an overreliance on securities sold under agreements to repurchase may lead to asset-liability maturity mismatches. For instance, using short-term borrowed funds to finance medium- to long-term assets such as margin lending and proprietary investments could create imbalances in the maturity structure.

As of January 30, 2026, Gf Securities had outstanding publicly issued perpetual subordinated bonds totaling 26.6 billion yuan. If the latest bond offering (3 billion yuan) is successfully issued, the cumulative balance of publicly issued perpetual subordinated bonds would reach 29.6 billion yuan (excluding short-term public bonds, public subordinated bonds, and public corporate bonds), accounting for 18.55% of the company's net assets of 159.545 billion yuan as of the end of September 2025.

Does the HKD 6.1 billion fundraising align with the business contribution?

In January 2026, Gf Securities unveiled a HKD 6.1 billion refinancing plan, combining a discounted H-share placement with the issuance of zero-coupon convertible bonds.

Specifically, the H-share placement involved issuing 219 million new shares at HKD 18.15 per share to no fewer than six independent investors, raising approximately HKD 3.959 billion. The company also issued zero-coupon convertible bonds worth HKD 2.15 billion, with an initial conversion price of HKD 19.82 per H-share. If fully converted, these bonds would result in the issuance of approximately 108 million H-shares, representing about 6.37% of the existing issued H-shares and about 5.99% of the enlarged H-share capital after conversion.

Gf Securities stated that the entire HKD 6.1 billion raised would be used to increase capital in its overseas subsidiaries to support international business development.

However, the company's overseas revenue has consistently remained in the single-digit percentage range, mostly below 5% historically. According to Wind data, Gf Securities' overseas revenue in 2024 was 1.35 billion yuan, accounting for 4.97% of total operating revenue. In the first half of 2025, overseas revenue was 1.14 billion yuan, representing 7.4% of the total.

It is worth noting that the H-share placement and convertible bond issuance were completed on January 14, 2026. The placement price represented a discount of approximately 8.38% compared to the closing price on January 6, 2026 (the date of the subscription agreement signing), while the initial conversion price for the convertible bonds was set at a 0.05% premium to the previous day's closing price.

Possibly due to the discounted placement price, Gf Securities' H-share price fell 4% on January 7. As of the close on February 9, the H-share price stood at HKD 17.4 per share, down 12.16% from the January 6 closing price of HKD 19.81, indicating significant short-term pressure on the stock.