Provincial Funding Pains

Tightening liquidity in China’s money markets has made it far more difficult for companies to issue bonds, with outright volumes of corporate bonds outstanding contracting by the largest margin in history in December, and issuance remaining weak in a holiday-shortened January. Provincial credit data from the PBOC shows companies in China’s rustbelt provinces targeted for supply side reforms are struggling to sell bonds, while SOEs in Beijing have also surprisingly been squeezed in the second half of last year. As expected, provinces with thriving property markets dominated corporate bond issuance last year, but could be impacted by tighter money market conditions in 2017.

Posted August 1, 2017
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