China Developers’ Dollar Bond Sales Fall to Lowest in 18 Months

(Bloomberg) -- Chinese real estate firms’ sales of dollar bonds tumbled to their lowest level since pandemic worries roiled markets last year, as default risks have effectively frozen borrowers out of the offshore market.

There were $1.25 billion of such notes priced by six real estate companies in October, an 81% plunge in issuance from a year earlier, according to Bloomberg-compiled data. It’s the least since $287 million of dollar bonds were sold in April 2020.

Last month’s activity was hurt by yields on junk-rated China dollar bonds, a market segment dominated by developers, hitting their highest level in a decade at 20%. That’s made refinancing debt prohibitively expensive for many such borrowers. At least four builders defaulted on dollar notes in October and the sector saw a record number of downgrades, as the major international ratings firms have said many developers face liquidity issues while billions of dollars in bonds come due.

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