SHANGHAI, Dec 16 (Reuters) - At least 46 Chinese firms shelved debt issuance plans totaling over 50 billion yuan ($7.20 billion) this month as a rout in the country’s bond market deepened, Reuters calculations showed.
Having already doubled the 20.8 billion yuan called off in November, cancellations appeared to accelerate in recent days as the U.S. Federal Reserve’s rate hike and hawkish policy stance triggered a fresh bout of selling in China’s bond market.
On Thursday alone, 10 companies, including Chenming Group and China National Salt Industry Corp, announced debt issuance cancellations.
During the first half of this month, 46 companies, including paper maker Chenming Group, green energy firm Xinte Energy, and semiconductor producer San An Group cancelled their debt issuance plans, according to statements posted on the website of China’s interbank market.
Saying they would wait for a more favourable time to issue debt, the companies cited unfavorable market conditions and higher borrowing costs, as bond yields spiked over the past month to reflect expectations of higher inflation.
Affected issuers include both private-run and state-owned firms.
For example, State Grid Corp announced on Dec 2 that it would delay the issuance of 180-day bills worth 10 billion yuan, “due to relatively big fluctuations in the bond market,” in one of the biggest debt issuance plan killed this month.
During the August-October period, China’s treasury yields had hovered near their lowest levels since the global financial crisis, but both short-term and long-term borrowing costs have spiked since mid-November. And bond prices, which move inversely to yields, tanked.
$1 = 6.9470 Chinese yuan renminbi Reporting by Samuel Shen and John Ruwtich; editing by Simon Cameron-Moore