China’s shares of the Asia ex-Japan region’s dollar bond issuances has shrunk to its lowest since 2014 as per Bloomberg. Mainland China issuers have sold $98.1bn in dollar bonds in 2021, less than 50% of the region’s sales this year. Bloomberg adds that the region’s dollar bond sales grew 13%, outpacing China’s issuances and extending a falling trend of market share since 2017 for Chinese issuers. Thu Ha Chow, portfolio manager at Loomis Sayles Investments Asia Pte. says that the government’s three red-lines policy and China Huarong’s financial uncertainty have impacted 2021 dollar-bond issuances from China.

Meanwhile, bond issuances by local government financing vehicles (LGFVs) have slowed amid growing investor concerns around defaults. The local governments have been veering towards the profitable LGFVs and shunning the ones with poor performance. As per SCMP, data collected by CSCI Pengyuan Credit Rating revealed that the bond issuance by LGFVs had seen a drop of ~75% in May compared to April when only 209 bonds worth CNY 151bn ($23.3bn) were issued. The issuance was 31% lower YoY in quantity and 36% YoY in value. According to S&P “The net financing for LGFVs had turned negative for the first time in years reflected investor reticence amid growing default risks”.

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