China’s Record Dollar-Bond Flood Leaves Buyers Wanting Even More

Demand for dollar bonds from Chinese issuers soared to a fresh high as the nation’s economic recovery gained momentum.

Orders for Chinese offerings rose to 7.6 times their issuance size in August, the highest ratio since Bloomberg began collecting available deal statistics in 2016. Bonds of all Asian issuers, excluding Japan, were 6.8 times subscribed, the highest since March 2019, the data show.

Chinese companies sold a record amount of notes in the U.S. currency this summer as central bank support and signs of an economic rebound boosted investor demand. Borrowers from that nation led about $23 billion of debt sales by Asian issuers in August, more than double the year-earlier period, as companies took advantage of cheaper borrowing costs to boost cash buffers.

Developers from China enjoyed some of the strongest demand for their offshore offerings, while investors also piled into deals elsewhere in the region, as Asian dollar notes offered buyers additional spreads over U.S. peers.

$2.5b Orders for $200m Bond” class=”terminal-news-story” target=”_blank”>Powerlong Real Estate Holdings Ltd.’s $200 million bond drew more than $2.5 billion of $2.5b Orders for $200m Bond” class=”terminal-news-story” target=”_blank”>orders, while Malaysia’s Axiata Group Berhad garnered in excess of $3.8 billion of $6.8b Orders for $1.5b Two-Part Bond” class=”terminal-news-story” target=”_blank”>demand for its $500 million 10-year sukuk, according to people familiar with the deals.

Demand for non-China Asian dollar bonds was 5.2 times the issuance size in the month, slightly up on July and high by historical standards.

While there are signs of robust demand, the pace of issuance is expected to slow in Asia’s primary dollar bond market through the rest of the year as issuers have front-loaded funding. Most bankers in a recent Bloomberg survey said they expected Asian issuers outside Japan to sell as much as $84 billion of dollar notes in the final four months of 2020. That would put the full-year tally slightly under 2019’s record $326 billion.

— With assistance by Adrian Yim, and Huaiyao Qiu

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