China’s LGFV bonds to top offshore dollar debt issuers in 2022 as market grows tired of defaults and delayed payments by developers
- Local government financing vehicles (LGFVs) are expected to remain China’s largest issuers of dollar debt offshore this year
- LGFV issuance soared 184 per cent as of the end of April from a year earlier, according to Pengyuan International
China’s local government financing vehicles (LGFVs) will remain one of the largest groups of offshore bond issuers this year, as they increased their fundraising amid the market’s general loss of appetite for real estate developers.
LGFVs are likely to remain the top sellers of offshore debt after their US$28 billion issuance propelled them to the top last year, according to Moody’s Investors Services. LGFVs made up a quarter of China’s 2021 corporate debt fundraising, Moody’s said.
“Some LGFVs at lower administrative levels have been diversifying their funding channels via offshore markets due to tightened regulations on the use of proceeds from new onshore issuance,” said Zhang Shuncheng, an associate director at Fitch Ratings.
Chinese companies issued a third fewer dollar bonds in the year to May 5, slashing the proceeds by 45.3 per cent, according to data compiled by Refinitiv. Property developers, among the biggest corporate borrowers in China, sold only 10 dollar bonds this year, making up 4.3 per cent of the total, a drop compared with the 44 issues and 20 per cent market share in the same period last year.
