More Chinese firms seeking bond financing overseas

Chinese enterprises have issued about US$180 billion in overseas debt since 2017, a rise of 70 percent from last year, setting a historical record high, the Economic Information Daily reported.

Insiders think it has to do with the increasing cost of financing via the domestic bond market. Xie Tong, the China director of JP Morgan Chase’s Debt Market Department, said overseas bonds have certain advantages in the medium to long-term from the perspective of interest rates, since the rate in the domestic market has risen rapidly.

Meanwhile, an increasing number of Chinese enterprises have begun to launch overseas expansion or mergers and acquisitions, which is driving them to finance overseas in order to meet their capital needs.

Noticeably, “there are a lot of new names,” Xie said. “It was the first time for many Chinese firms to issue foreign debt.”

The size of overseas bonds issued by Chinese companies is expected to continue to stay at a high level, and could even hit US$200 billion for the year ahead, the report said.

(ASIA TIMES)