Northeast Securities Subordinated Debt Issuance Rate Relatively High; Question Remains on Whether Sole IPO Sponsor Has Weak Accounting Foundation

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Produced by: Sina Finance Listed Company Research Institute

Author: IPO Refinance Team / Turing

On March 19, Northeast Securities released the “2026 Public Offering Short-term Corporate Bonds (First Issue) Results Announcement for Professional Investors,” continuing the trend of frequent bond issuance since 2026.

As of the end of the first three quarters of 2025, Northeast Securities’ other liabilities accounted for 43 companies’ pure securities business listed brokerages, ranking second among them, only behind Zheshang Securities. One reason for the relatively high proportion of other liabilities is that the company classifies subordinate bonds (non-perpetual) as other liabilities. The high interest rates on recently issued subordinate bonds by Northeast Securities, which exceed those of many brokerages, warrant attention—possibly related to the company’s “shorter debt maturities” and the need for “ongoing strengthening of compliance and risk control.”

Currently, Northeast Securities has only one A-share IPO project in reserve—Shanghai Yongchao New Material Technology Co., Ltd. (Yongchao New Material). There are numerous issues with revenue recognition documents, such as incomplete or missing signatures, incomplete document retention, and documents with only signatures but no official seals, raising questions about the effectiveness of accounting fundamentals and financial internal controls. Some remedial measures by Northeast Securities were completed after receiving inquiry letters; whether they effectively prompted Yongchao New Material to resolve revenue document issues before filing is debatable.

Higher interest rates on subordinate bonds

Wind data shows that by the end of the first three quarters of 2025, Northeast Securities’ other liabilities totaled 12.159 billion yuan, accounting for 13.57% of total liabilities and 11.05% of total assets. These proportions rank second among 43 listed brokerages, only behind Zheshang Securities.

One reason for the high amount of other liabilities is that the company classifies subordinate bonds (non-perpetual) as other liabilities. As of the end of Q3 2025, the subordinate bonds amounted to 11.071 billion yuan out of total liabilities of 12.159 billion yuan.

In practice, many brokerages, such as Huatai Securities and Guodu Securities, classify subordinate bonds (non-perpetual) under “payable bonds,” but Northeast Securities classifies them under “other liabilities.”

Moreover, the interest rates on recently issued subordinate bonds by Northeast Securities are relatively high. For example, the subordinate bonds issued in December 2025 had 100% of the planned issuance amount pre-set for offline issuance, not exceeding 800 million yuan; the actual offline issuance was 620 million yuan, accounting for 77.5% of the planned total, with a subscription multiple of 1.5161 times. The coupon rate was 2.48%, with a 3-year maturity.

A 2.48% rate over three years is not low. Recently, Huatai Securities issued a 3-year subordinate bond in January 2026 with a scale of 4 billion yuan and a coupon rate of 1.99%, significantly lower than Northeast Securities.

Similarly, Oriental Fortune Securities recently issued the “26 Dongcai Securities C1” with a 3-year term, an actual issuance scale of 800 million yuan, and a coupon rate of 1.95%.

Another example is Huaxin Securities, a small to medium brokerage, which issued a 3-year subordinate bond in March with an actual amount of 650 million yuan and a final coupon rate of 2.10%, with a subscription multiple of 2.71. Both the subscription multiple and the issuance rate are better than Northeast Securities.

Data shows that compared to the over 2.0% rates at the end of 2024, the rates for several subordinate bonds issued at the end of 2025 and early 2026 have further declined. Especially for the 3-year products issued by Oriental Fortune and Huatai Securities, rates have fallen below 2%, entering the “1 era.”

High proportion of short-term debt and frequent compliance/risk issues

Why are the interest rates on Northeast Securities’ subordinate bonds still high, lower than some other brokerages issuing at the same time? Public information still offers limited answers.

According to a February 2026 tracking rating report by United Credit Ratings, issues such as Northeast Securities’ short debt maturities and the record high frequency of penalties on securities firms since 2024 are noteworthy.

Source: United Credit Ratings Tracking Rating Report

As of the end of Q3 2025, Northeast Securities’ total liabilities (consolidated) reached 89.627 billion yuan, a large scale, with a debt structure mainly short-term.

Source: Announcement

As of the end of Q3 2025, interest-bearing liabilities totaled 51.953 billion yuan, with 36.893 billion yuan due within one year, accounting for 71%. When short-term debt exceeds 70%, the company’s refinancing pressure significantly increases; any market liquidity tightening or changes in credit conditions could lead to refinancing difficulties.

Northeast Securities’ internal control and compliance issues are also concerning. United Credit Ratings pointed out: “Since 2024, penalties on securities firms have reached record highs, with regulators continuously strengthening the responsibilities of intermediary gatekeepers; the company’s wealth management, investment banking, and futures businesses have all faced penalties, and the impact of stricter industry regulation on business operations warrants attention.”

Source: Announcement

Public data shows that from March 2022 to April 2025, over three years, Northeast Securities received at least 8 regulatory warning letters, and was involved in two cases of CSRC investigations resulting in penalties. The effectiveness of its risk control, internal control, and compliance is questionable.

Is the IPO sponsor’s accounting foundation weak?

Wind data indicates that as of March 19, 2026, Northeast Securities has only one A-share IPO project in reserve (based on exchange acceptance, excluding issued or terminated projects), with Yongchao New Material as the sole sponsored company.

The prospectus states that Yongchao New Material has focused on R&D and application of special metal coatings, functional thin films, and nano-ceramic modified materials since its founding. Its main products include VCM functional films, vacuum coatings, and automotive films. In December 2024, its application for listing on the Beijing Stock Exchange was accepted.

The company’s accounting fundamentals and internal control effectiveness are concerning. Historically, Yongchao New Material has had issues such as invoice discrepancies, third-party payments, and irregular logistics expense reimbursements, with three lawsuits in 2024 related to logistics fee disputes.

More critically, the basis for revenue recognition directly affects revenue authenticity. In 2022, 25.24% of revenue had issues with incomplete signatures or dates; in 2023, the figure was 3.08%. In 2022 and 2023, 1.49% and 0.70% of revenue respectively corresponded to incomplete documents. From 2022 to mid-2025, the proportion of revenue with only signatures on recognition documents was 0.22%, 19.15%, 68.85%, and 72%, respectively; documents with only client seals or authorized seals accounted for 57.02%, 45.79%, 0%, 0%. There are also issues with incomplete receipt of customer acknowledgment documents. The exchange has inquired whether Yongchao New Material has weak accounting fundamentals and the establishment and operation of its internal control system.

Theoretically, before submitting IPO application materials in December 2024, Northeast Securities should have completed comprehensive due diligence on Yongchao New Material’s reporting periods (2022, 2023, and first half of 2024).

However, inquiry responses suggest doubts about whether Northeast Securities effectively urged Yongchao New Material to resolve revenue document compliance issues before filing, as many of the sponsor’s checks were conducted only after listing application and initial inquiries.

Source: Yongchao New Material Announcement

For example, interviews with Yongchao New Material’s clients such as Jiangmen Xinmei Metal Materials Co., Ltd., Zhongshan Stanley Metal Technology Co., Ltd., Shandong Xin Jufeng Taidong Packaging Co., Ltd., Qingdao Junyu Win-Win Information Technology Co., Ltd., Shanghai Rensu Industrial Co., Ltd., Zhengzhou Lingsu Automotive Supplies Co., Ltd., Taizhou Dongqiang Plastic Film Technology Co., Ltd., Henan Liaojiade Trading Co., Ltd., Taizhou Yuanzhou International Trade Co., Ltd., Taizhou Zhongjiang International Trade Co., Ltd., occurred after June 2025.

This indicates that during the filing stage, Northeast Securities may have somewhat believed the issuer’s explanations (such as slow client stamping processes, small client management issues) and did not thoroughly verify some problems before filing.

Both Yongchao New Material and Northeast Securities state that although there have been issues with incomplete or missing date information on revenue documents, the company’s internal controls can ensure revenue authenticity. After discovering these issues, the company actively optimized sales-related internal control processes, gradually established sound internal control systems, and no longer experienced such problems. The internal controls are now consistently and effectively implemented, indicating no weak accounting foundation.