Chinese firms’ dollar-bond issuance hit the lowest level in a decade during the second quarter, and there are few near-term catalysts to reverse the trend as cheap onshore borrowing costs and economic uncertainty persist, reports Bloomberg. Activity last quarter slumped 78% from a year earlier to $8.7 billion, according to data compiled by Bloomberg. From 2017 through 2021, quarterly totals regularly topped $40 billion. In contrast, dollar-bond issuance by European borrowers has been running near a record-high pace.
While slowing their dollar-bond deals, Chinese companies amped up borrowing onshore. Their issuance of yuan notes rose 18% in the second quarter to RMB 4.37 trillion ($603 billion), Bloomberg-compiled data show, trailing just the record set in the final three months of 2021.
Dollar-bond issuance by Chinese firms slowed the past 18 months as many central banks around the world embarked on one of the most aggressive tightening cycles in decades, sending interest rates surging. But China has been an outlier, keeping rates low. The latest batch of cuts were announced in June amid efforts to support the country’s slowing economy. Calls have been building for government stimulus.
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