Global EditionASIA 中文雙語(yǔ)Fran?ais
Business
Home / Business / Finance

Buoyant bond yields land firms in financing muddle

By Meng Fanbin | China Daily | Updated: 2017-06-12 07:42
Share
Share - WeChat

A worker counts Chinese currency renminbi at a bank in Linyi, East China's Shandong province, Aug 11, 2015. [Photo/Xinhua]

Corporate bond yields in China have been rising for the last few months-and companies are feeling the pinch.

For instance, the yield on five-year, AAA-rated corporate bonds reached 6.14 percent in May, in contrast to 3.12 percent in December, and the current five-year bank lending rate of 4.75 percent, according to Hithink Royal Flush Information Network, a financial information provider.

The uptrend began in December when Chinese policymakers drove money market rates higher to rein in companies' rising leverage and prevent systemic risks.

Ever since, the cost of selling corporate bonds has been rising, forcing companies to look for other ways of financing.

The People's Bank of China twice raised the cost of open market funds and medium-term loans this year, while keeping benchmark lending and deposit rates unchanged since October 2015.

While most blue chip companies are turning to bank loans in the short term, some of the rest are issuing dollar-denominated bonds overseas because of their relatively lower cost.

In some odd cases, bonds were issued at yields of 7 percent or more (Guizhou Logistics Park Project issued at 7.8 percent).

Some 394 bonds, which had sought to raise 369.43 billion yuan ($54.35 billion), the highest for the January-May period, were canceled, according to 21st Century Business Herald.

Bloomberg quoted Shen Bifan, an analyst at First Capital Securities, as saying that "with the benchmark lending rates on hold, companies might as well turn to bank loans if they can", rather than braving the bond market.

The rare interest-rate inversion is likely to be temporary, said a bond department director at a listed commercial bank who sought anonymity. "Adjustment of benchmark interest rates lags the bond market yields, but with supervision tightening and corporate leverage reducing, the cost of bank loans must rise finally.

"Companies that are able to get the benchmark interest rates are few, and in most cases, bond-issuers have to accept banks' buoyancy, which is more than 20 percent. So, the cost of loans may end up higher than direct financing costs."

Tian Yizhong, president of China Construction International Investment Fund, said that for companies seeking financing, the combined cost of loans and bond issuances cannot be directly compared with interest rates.

Dollar debt issuance overseas surged in the January-May period. Industry data show that as of late April, Chinese corporate bond-issuers, including enterprises and financial institutions, raised $71.4 billion from the G3 bond market overseas (bonds denominated in dollars, euros and yen), up 175 percent year-on-year.

"For firms of relatively better credit profiles and some large companies with their own businesses abroad, overseas bond issuance is a good choice, given the dollar appreciation and large spreads," said the bond department director.

But that option may cease in the wake of Moody's downgrade on May 24 of China's credit rating to A1 from Aa3, the same as that of Japan and the Czech Republic.

A Bloomberg report said Moody's downgrade may push Chinese companies to fall back on the local debt market. So, it is conceivable that they may borrow even more from domestic banks as overseas debt becomes more expensive.

"Even if the benchmark interest rate remains unchanged at 4.9 percent, the practical lending rates are not at a constant level of 4.9 percent," said Wang Yiqin, general manager of the asset management division of New Times Securities Co Ltd.

"In addition, the benchmark deposit and lending rates are expected to be raised in the near future, because they are now at the lowest level historically."

So, no matter which way companies raise finance, the related cost will continue to rise, piling up more pressure, he said.

"Periodical achievements of the leverage-reducing measures by the central government have already appeared. On Thursday, the central bank injected 498 billion yuan via its medium-term lending facility to ease a seasonal liquidity strain," the bond department director said.

 

 

Top
BACK TO THE TOP
English
Copyright 1995 - . All rights reserved. The content (including but not limited to text, photo, multimedia information, etc) published in this site belongs to China Daily Information Co (CDIC). Without written authorization from CDIC, such content shall not be republished or used in any form. Note: Browsers with 1024*768 or higher resolution are suggested for this site.
License for publishing multimedia online 0108263

Registration Number: 130349
FOLLOW US
CLOSE
 
主站蜘蛛池模板: 一区三区三区不卡| 亚洲日本视频在线观看| 欧美成人777| 好日子在线观看视频大全免费| 国产99视频在线观看| 884hutv四虎永久7777| 成人激情免费视频| 亚洲AV永久无码天堂网| 狼友av永久网站免费观看| 国产免费女女脚奴视频网| 91制片厂果冻传媒白晶晶| 思思久久99热只有精品| 久久婷婷电影网| 欧美成人精品a∨在线观看| 免费精品99久久国产综合精品| 3d动漫h在线观看| 娜露温泉无删减视频在线看 | 国产AV日韩A∨亚洲AV电影| 青青操免费在线观看| 天堂在线中文在线| 中文字幕一二三四区| 色橹橹欧美在线观看视频高清| 婷婷五月综合激情| 久久人人爽人人爽人人av东京热 | 人妻体体内射精一区二区| 手机看片福利在线| 女人扒开腿让男生猛桶动漫| 久久精品人人做人人爽电影蜜月| 男人桶女人羞羞漫画全集| 国产乱人免费视频| 日本zzzzwww大片免费| 成人综合国产乱在线| 九九综合VA免费看| 欧美激情videos| 免费一级e一片在线播放| 草莓视频在线观| 国产永久免费高清在线观看视频| 一区二区三区免费视频播放器| 校花小冉黑人系列小说| 亚洲毛片基地日韩毛片基地| 真实国产乱子伦沙发睡午觉|