China Dollar Debt Orders Dip to Six-Month Low After Record Binge

(Bloomberg) -- Demand for Chinese dollar bonds sank to the lowest level since a pandemic-induced selloff roiled global credit markets in March, a sign of investor fatigue after a record order splurge.

Orders for Chinese offerings fell to 4.9 times their issuance size in September, the lowest ratio in six months, according to Bloomberg-compiled data of available deal statistics. That compares with a record 7.8 times in August. Bonds of all Asian issuers, excluding Japan, were 4.2 times subscribed.

Investor enthusiasm struggled to keep up with the issuance bonanza last month that saw Chinese firms selling some $25.3 billion of bonds, the most since January, Bloomberg data show. Appetite also took a hit amid fears of a credit crunch at China Evergrande Group that sent spreads on Asia’s junk debt to a three-month high.

Sales of offshore debt in the region are expected to decline toward the end of the year after China’s record binge, with many borrowers having already tapped the market for their refinancing needs.

Longer-term concerns about weaker property firms in the region also remain, particularly as Chinese regulators introduce new guidelines to rein in their offshore borrowings. The subscription ratio for Asian borrowers outside China fell to just 3.6 times in September.

©2020 Bloomberg L.P.