Greater China First-Half Offshore Loans Drop 25% Amid Pandemic

(Bloomberg) --

Offshore loan volumes in the Greater China region tumbled by a quarter in the first half of the year to the lowest level since late 2016 as companies borrowed less in the wake of the coronavirus pandemic.

Firms in China, Hong Kong, Macau and Taiwan borrowed $55.6 billion in the first six months of 2020, a 25% drop from a year earlier, data compiled by Bloomberg show. Borrowers from the mainland accounted for just over a third of the total volumes as loans to them tumbled 43% to the lowest since the last six months of 2015.

The worst may be over amid signs the world’s second-largest economy is stabilizing, with a BofA Securities banker expecting a rebound in loan volume as growth revives and funding needs for buyouts and acquisitions overseas increase.

“We are generally optimistic of an uptick in Greater China syndicated loans in the second half of the year, driven by a revival of growth in China,” said Hong Kong-based Adnan Meraj, managing director, co-head Asia Pacific syndicated and leveraged finance of BofA Securities. “We are already seeing positive signs around domestic production and a pick-up in retail foot traffic.”

Lending will also be fueled by buyout deals of Chinese companies listed in the U.S., Meraj said. Selective acquisitions in Europe and globally will also spur more loans, he said.

Chinese companies are ditching their U.S. listings at the fastest pace since 2015, as they grapple with rising tensions between Beijing and Washington.

©2020 Bloomberg L.P.