APAC (ex-Japan) USD HY-bond-issuance volumes hit six-year January low as Chinese property sector weakens further

Data InsightDebtDynamics 10 February

APAC (ex-Japan) USD HY-bond-issuance volumes hit six-year January low as Chinese property sector weakens further

Asia Pacific (ex-Japan) USD high-yield-bond issuance volume in January fell to its lowest January monthly tally since 2016, the result of Chinese property developers largely being cut off from the bond market amid a growing number of stressed and distressed situations in the sector.

USD high-yield bond issuance totaled USD 4.03bn across 13 deals in January, a stark contrast from the USD 18.57bn via 60 deals printed in January 2021 and the record high USD 22.02bn from 53 deals set in January 2020.

Of the USD 4.03bn bonds issued last month, only USD 894m were deals from Chinese real-estate developers. And of the USD 894m, only one deal was a genuine primary deal: CIFI Holdings’ (rated BB-/stable by Moody’s and BB/stable by Fitch) tap of an additional USD 150m of its original USD 350m 4.45% due-2026 green notes. The remaining USD 744m were distressed exchange offers from developers JY Grandmark Holdings, Yuzhou Group Holdings and DaFa Properties Group for bonds maturing between January to February this year.

With high yield bond primary market all but closed, Greentown China Holdings (rated BB-/stable by S&P and Ba3/stable by Moody’s) was able to tap the investment-grade market via a USD 400m 2.3% three-year green bonds which are backed by a standby letter of credit from China Zheshang Bank Hangzhou Branch (rated BBB-/stable by S&P and Baa3/stable by Moody’s).

Otherwise, Chinese developers were able to obtain funding via hybrid securities and so Country Garden Holdings issued HKD 3.9bn 4.95% due 2026 convertible bonds and Logan Group issued HKD 1.95bn 6.95% 4.5-year equity-linked notes.

Volumes of non-Chinese high-yield issuances totaled USD 2.625bn last month, which was the lowest January volume since 2019. Deals priced during the period include: The Islamic Republic of Pakistan’s USD 1bn 7.95% seven-year sukuk bonds, Shriram Transport Finance’s USD 475m 4.15% 3.5-year social bonds, ReNew Power’s India Clean Energy’s USD 400m 5.25NC3.5 green bonds, JSW Infrastructure’s USD 400m 4.95% due-2029 sustainability-linked notes and Australian agricultural-chemical maker Nufarm’s USD 350m 5% 8NC3 bonds.

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