Date
21 October 2017
Bank of China recently issued a well-received US$3.5 billion, four-currency bond. Photo: CNSA
Bank of China recently issued a well-received US$3.5 billion, four-currency bond. Photo: CNSA

Chinese firms paying big to borrow

Some of China’s top companies are having to pay a premium to borrow.

While global investors continue to pile into Chinese corporate debt as stocks have plunged, raising bond prices and thus lowering rates, mainland firms are paying higher interest rates than corporate issuers elsewhere in Asia, The Wall Street Journal reported.

Investment-grade Chinese corporate bonds yield 1.92 percentage points above the benchmark 10-year US Treasury note, compared with about a 1.05 percentage point spread for their South Korean counterparts.

High-grade corporate bonds in India are 1.86 points above Treasurys, while Malaysian debt is 1.37 points above Treasurys, an analysis by UBS shows.

China bonds “have higher volatility, with lots of supply”, the newspaper quoted Edwin Chan, UBS head of Asia credit research in Hong Kong, as saying.

“People’s expectation of more ongoing supply helps widen their credit spreads, too.”

This year, Chinese firms have sold US$73.8 billion of bonds denominated in US dollars or euros, up 35 percent from a year earlier, figures from data provider Dealogic show.

– Contact us at [email protected]

RA/FL

EJI Weekly Newsletter

Please click here to unsubscribe