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26 Jun 2013
Flash: Concern mounts in China over liquidity – Deutsche Bank
FXstreet.com (New York) - According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “In China, whether or not the liquidity picture eases, there is concern building that what's happens so far will impact loan growth over the coming 1-2 months and to real economic growth.”
In terms of the observable indicators, the one-year yields on local AAA corporate debt has spiked 121bp to 5.15% according to the South China Morning Post citing data from ChinaBond. At the same time, bond sales slumped to RMB158 billion for the month of June, the least in 17 months and down 57% from May.
The article says that at least 11 companies have delayed bond sales this week alone and about RMB7 billion of offerings have been postponed. Whether the banking system liquidity issues lead to a longer term slowdown in credit growth, remains to be seen, but constrained banking liquidity appears to have limited the ability of companies to raise funds from the bond market for the time being.
In terms of the observable indicators, the one-year yields on local AAA corporate debt has spiked 121bp to 5.15% according to the South China Morning Post citing data from ChinaBond. At the same time, bond sales slumped to RMB158 billion for the month of June, the least in 17 months and down 57% from May.
The article says that at least 11 companies have delayed bond sales this week alone and about RMB7 billion of offerings have been postponed. Whether the banking system liquidity issues lead to a longer term slowdown in credit growth, remains to be seen, but constrained banking liquidity appears to have limited the ability of companies to raise funds from the bond market for the time being.