Chinese non-financial issuers sold just $2.9 billion of offshore bonds in July, less than one-fifth the amount sold during the same period last year, as concerns over rising numbers of defaults and tightening regulation of bond sales squeeze both supply and demand, Caixin reports.
There has been a boom in the number of dollar-denominated bond sales from China over the past 12-18 months as Beijing’s deleveraging drive has raised borrowing costs within China. Offshore corporate bond sales reached $17.3 billion in March, but have been falling steeply since June. The total for July was the lowest since August 2016.
Property developers in particular appear to be feeling the heat from China’s clampdown on financial risk. More than one-third of China’s offshore bond issuers in the second quarter were developers. Some issuers are selling their bonds at a coupon rate of more than 10%, nearly double the average level, according to Caixin.