China’s borrowing costs fall as bond yields narrow

China’s US dollar borrowing costs in October fell by the most since January on the back of renewed optimism in the country’s economy, Bloomberg reported. The yield on China’s US$1 billion of 4.75% notes due October 2013 fell 31 basis points to 1.46%, according to Royal Bank of Scotland (RBS.NYSE) prices. Moody’s has said it may raise China’s A1 credit rating, citing the nation’s “effective policy response and rapid recovery from the global recession.” Falling benchmark borrowing costs would be of help to Chinese companies looking for debt funding. Yields on Chinese corporate dollar-denominated bonds fell to 5.18% in October, a five-year low, according to JPMorgan Chase (JPM.NYSE) indexes. Evergrande Real Estate’s (3333.HK) US$1.35 billion of 13% notes due January 2015 have the heaviest weighting in the index; their yield declined to a record 10.3% as prices of the securities rose.