China Firms Plan Up To $15 Bn In Overseas Bond Issues In Q4 On Stimulus Boost

Financial advisers said that Chinese investment-grade companies are lining up USD 10 billion to USD 15 billion in offshore bond offerings this quarter, as Beijing's economic stimulus measures cut fundraising costs and whip up borrowers' appetites.

Those levels mean Chinese companies are poised to raise the most fourth-quarter offshore debt in three years. They garnered about USD 5.9 billion in dollar and euro bonds just last week, making it the busiest week for offshore debt fundraising in 2024, Dealogic data showed.

"The positive momentum from the stimulus measures and the expected FOMC rate cuts could nudge issuers who are nimble and ready to come to market more quickly - they could look at windows in the coming weeks," said Xixi Sun, Citigroup's head of greater China bond syndicate.

China, in the past fortnight, has launched a massive stimulus program that included cutting lending and mortgage interest rates, in an attempt to revitalise the country's crisis-hit property sector.

Beijing also plans to issue about 2 trillion yuan (USD 285 billion) worth of sovereign bonds this year to boost household consumption, Reuters reported last week, citing sources with knowledge of the matter.

Ratings agency Fitch said in a report this week that China's move to loosen the country's credit conditions was at a faster pace than it had anticipated.

The Federal Reserve cut interest rates by 50 basis points last month, putting the US economy firmly on a path of lower interest rates.

Credit spreads for Chinese investment-grade firms have tightened by 10 to 20 basis points since the government's stimulus measures were announced last month, bankers said, indicating investors' risk appetite towards China was improving.

They said that falling interest rates and tighter credit spreads will reduce funding costs for Chinese corporates.

Meituan, China's biggest delivery platform, raised USD 2.5 billion last week in a two-tranche dollar bond that was the country’s first technology sector deal in 2024. Strong demand for the deal meant the final price was up to 30 basis points cheaper than the range first flagged to investors.