China Opens Junk Bond Market

18.06.12 12:33

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China Opens Junk Bond Market

Leveraged Finance News (USA) - Friday, June 8, 2012 Author: Matthew Sheahan China launched its first high yield bond market today, promising a new avenue of funding for companies in the wake of low loan volumes in Asia. Approved companies for the junk bond market were announced by the Shanghai Stock Exchange and the market saw its first bond trade soon after. Suzhou Huadong Coating Glass sold approximately $8 million in 9.5% bonds due 2014. Reports indicate that seven companies have been approved to sell bonds on the market. The bonds are sold on a trading platform run by the Shanghai Stock Exchange. Asian debt markets are not as mature because companies there have largely relied on local banks for funding, according to analysts. The opening of a high yield market is an important step in bringing Asian debt markets up to speed with North America and Europe, though analysts point out that bond issuance will likely remain low for the foreseeable future because of volatility projected onto the world markets by the situation in Europe. The move comes as Asia Pacific (ex Japan) countries have experienced a dearth of available financing. Syndicated loan volume in the region is at its lowest year-to-date levels since 2009, according to a late May report from Dealogic. China accounts for the third largest share of Asia Pacific loan volume so far this year, with $12.1 billion or13.6% of the market. Asia Pacific (ex Japan) syndicated lending totals $88.8 billion through 325 deals so far this year. At the same time, internationally marketed debt capital for the region stood at a record $113.2 billion by early April, a boost of almost 30% from 2011s numbers. And corporate liquidity may be an issue for Asian companies. Moodys Investors Service issued a report today indicating that its Asian Liquidity Stress Index rose to 16.3% in May from 15.3% in April as the number of companies with its lowest speculative-grade liquidity rating increased. The 12-month trailing default rate for Asian junk-rated companies is at 2.63%. Section: News Index Terms: news Record Number: 000230944 Copyright, 2012, SourceMedia, Inc. All Rights Reserved. To bookmark this article, right-click on the link below, and copy the link location: China Opens Junk Bond Market

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