Chinese corporate dollar bond sales jump to their highest since 2022

(Bloomberg) – China’s $600 billion corporate dollar bond market is showing signs of revival as optimism about advances in artificial intelligence and recent government measures to alleviate the property crisis have helped boost confidence.

According to data compiled by data, Chinese companies have sold about $13 billion in final notes, which have been publicly announced so far this year. That’s twice the total of the year, the highest level since 2022.

The pipeline is driven primarily by financial companies and local government financing tools, but after years of absence, companies that have been knocked out by some in the real estate sector are returning to the market, based on the momentum that emerged in November.

As technology companies compete to develop more AI products, Beijing takes steps to prevent property debt defaults, which is as credit markets improve sentiment. Meanwhile, concerns that President Donald Trump’s tariff policy could prevent U.S. growth prompted investors to look at options elsewhere.

Wei Liang Chang, a strategist at DBS Bank Ltd., expects further improvements to the issuance this year. “Given the scarcity of Asian dollar bonds in the market, investors can certainly accept new issuances through state-backed names and, considering U.S. policy risks, diversification is needed,” he said.

In the secondary market, the dollar notes issued by Chinese investment-grade companies are tightening the price difference. Data compiled by Bloomberg shows that in recent weeks, the notes that expired in 2029 have hovered at the most tense difference in at least five years. Compared with the U.S. equivalent products within seven months, Chinese high-yield notes have an average premium.

“The sea becomes a skilled sailor,” said Gary Ng, a senior economist at Natixis. He added that as the U.S. market has seen by Trump’s policies, China may provide greater stability at this stage.

While most of the default Chinese developers are still struggling to cope with weak real estate sales and tough debt restructuring, some property-related companies are working to invest in new issuances.

Beijing Capital Group Co., one month after the real estate sector received its first dollar bond sales in two years, according to data compiled by Bloomberg.

The $450 million bond was priced at 10 times the issuance last week, with coupon rates of 10 times, 60 times lower than the basis point of the initial price guide, indicating strong investor demand.

According to Ting Meng, senior credit strategist at Anz Bank China Co. Anz Bank Co., Ltd., the Chinese dollar bond will continue to exceed the difference in other regions due to limited supply and onshore support.

In terms of total returns, Bloomberg’s China Investment Grade Dollar Bond Index was more than a year in February. The high-yield dollar bond index has produced an annual return of 3.8%, beating its pan-European and U.S. counterparts.

Natixis’ NG said it is important to look at the composition of investors in these transactions. “It’s hard to say that this sentiment has indeed improved without a comeback from foreign investors,” he said.

– Assistance with Jackie Cai.

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