Advertisement
Bonds
BusinessBanking & Finance

Funding the coronavirus fight: Chinese companies sell US$4.1 billion in bonds to shore up finances as economy falters

  • Legend Holdings, China State Shipbuilding, Central China Real Estate are among the borrowers that are tapping the capital market with “anti-epidemic bonds” amid virus outbreak
  • The Chinese bonds are among the US$9 billion of offshore deals by Asian borrowers signed since end of January

Reading Time:4 minutes
Why you can trust SCMP
The Solana shopping mall in Beijing stands almost empty on 12 February 2020. The disease caused by the novel coronavirus has been officially named Covid-19 by the World Health Organization (WHO). Photo: EPA-EFE
Alison Tudor-Ackroyd

Chinese companies have sold US$4.1 billion worth of bonds to strengthen their finances against a stalling business environment, taking advantage of the government’s order to relax funding approvals to help the nation overcome its worst public health crisis since 2003.

Advertisement

Legend Holdings, China International Capital Corporation (CICC) and China State Shipbuilding are among the Chinese borrowers that have sold new debt in recent weeks, continuing a record-breaking US$9 billion start to the year for bond issuance across Asia.

The fundraising by Chinese companies adds to the 6.8 trillion yuan (US$974 billion) of corporate bonds that are scheduled to mature this year, a second high-water mark after last year’s record of 7.6 trillion yuan, according to Bloomberg’s data. Bonds can provide companies with a relatively swift way of bolstering their finances against any fallout from the viral disease, dubbed Covid-19.
The health crisis in China has forced the closure of shops and theme parks, severely curtailed foot traffic at the outlets that remain open and disrupted parts of the global supply chain. As a result, China’s 2020 economic growth pace is widely expected to slow to less than 6 per cent as the virus buffets an economy already bruised by its year-long trade war with the United States.

“Some of these companies are adopting a defensive stance, taking money now as they don’t know what will happen down the road and many have refinancing needs later on in the year,” said Tim Fang, head of global markets at Hong Kong-headquartered investment bank AMTD Group who has been busy since the Lunar New Year holiday ended, sealing multiple deals for corporate Chinese clients.

Advertisement
Advertisement