Dollar Bond Demand in Asia Hits the Lowest Level Since 2019
(Bloomberg) -- Investor appetite for dollar bonds in Asia slumped to the lowest level in nearly two years last month, as China’s regulatory crackdowns and the financial woes of China Evergrande Group reverberated across the region.
Orders for dollar notes sold by issuers in Asia excluding Japan were an average 3.8 times the amount of debt issued in July, and 4 times for Chinese borrowers, according to Bloomberg-compiled data of available deal statistics. The figures were respectively 5.2 and 7.3 in June.
Yields on Chinese junk-rated dollar bond spiked last month, led by a slump in Evergrande notes. Worries about the firm, Asia’s biggest issuer of such debt, combined with Beijing’s clampdown on industries from tech to education weighed on the regional dollar bond market by late July, including investment-grade notes.
Last month’s dollar-bond subscription ratios in both China and across Asia were the lowest since August 2019, falling below the weakened demand seen during March 2020’s pandemic-fueled global market tumult.
Still, first-time borrowers were able to secure buyers for their notes. Chinese firms sold 12 debut dollar bond deals in the offshore market in July, compared to this year’s monthly average of about eight.
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|Asia Credit Outlook Has Turned More Challenging in 2H 2021: DBS|
Excluding both China and Japan, July’s subscription rate for dollar bond sales in Asia fell to 3.6 times the amount issued, matching a level last seen in October. The ratio was 4 times in June.
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