{"id":28538,"date":"2024-06-20T12:09:19","date_gmt":"2024-06-20T12:09:19","guid":{"rendered":"https:\/\/www.xtrememarkets.com\/?p=28538"},"modified":"2024-06-20T12:09:19","modified_gmt":"2024-06-20T12:09:19","slug":"chinese-bond-market-heats-up-firm-considers-50-year-sale","status":"publish","type":"post","link":"https:\/\/www.xtrememarkets.com\/US\/chinese-bond-market-heats-up-firm-considers-50-year-sale\/","title":{"rendered":"Chinese Bond Market Heats Up: Firm Considers 50-Year Sale"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Amid an unprecedented boom in bond issuance as borrowing costs plummet to record lows, a state-owned Chinese firm is contemplating an unprecedented offering of a 50-year note. This potential issuance would mark the nation&#8217;s longest corporate debt tenor if it comes to fruition.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Wuxi Industry Development Group Co., which is owned by the Wuxi city government near Shanghai, has engaged underwriters to gauge investor interest for a possible 1 billion yuan ($138 million) 50-year domestic bond sale. According to insiders, the deal is still in its early stages, and terms, including the tenor, may change.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If this bond with a 50-year maturity is issued and priced, it would set a new record for the longest-tenor corporate note ever in China&#8217;s local market, excluding perpetual securities, according to Bloomberg data.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Such an ultra-long tenor is exceptionally rare in corporate markets both in China and globally. However, firms are eager to secure cheap financing as China&#8217;s bond yields and credit spreads hit record lows. Investors are pouring funds into fixed-income assets, despite warnings from the central bank about a potential asset bubble.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The duration considered by Wuxi Industry is unusual even in China&#8217;s low-rate environment. More issuances with long tenors could follow, especially from local government financing vehicles (LGFVs). Senior Asia credit strategist at Australia &amp; New Zealand Banking Group Ltd., Ting Meng, noted that extending maturities with long-tenor loans and bonds could be a strategy to address LGFVs&#8217; high debt problems. However, she warned that issuers&#8217; credit and duration could pose risks if interest rates rise in the future.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Previously, only a few state-owned firms in China have issued 30-year corporate notes, which, until now, represent the longest tenor excluding perpetuals. Earlier this month, Wuxi Industry priced a 1 billion yuan, 30-year local bond at 3.23%.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The yield premium for 30-year AAA-rated corporate bonds over comparable sovereign debt has narrowed to a record low of 20 basis points this week, based on China Bond indexes compiled by Bloomberg.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Wuxi Industry, whose operations span semiconductors, trade, and investment, declined to comment on the matter. The company reported a profit of 1.9 billion yuan last year, according to its website.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As China\u2019s bond <a href=\"https:\/\/www.xtrememarkets.com\/US\/markets\/\"><strong>market<\/strong><\/a> continues to heat up, the potential issuance of a 50-year bond by Wuxi Industry Development Group could set a significant precedent, highlighting the trend of leveraging low borrowing costs to secure long-term financing. This move not only reflects the strategic financial maneuvers of Chinese firms but also signals a broader trend that could shape the future of corporate debt issuance in China.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Amid an unprecedented boom in bond issuance as borrowing costs plummet to record lows, a state-owned Chinese firm is contemplating an unprecedented offering of a 50-year note. This potential issuance would mark the nation&#8217;s longest corporate debt tenor if it comes to fruition. Wuxi Industry Development Group Co., which is owned by the Wuxi city<\/p>\n... <a href=\"https:\/\/www.xtrememarkets.com\/US\/chinese-bond-market-heats-up-firm-considers-50-year-sale\/\">continue reading<\/a>.","protected":false},"author":1,"featured_media":28539,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[15],"tags":[94,265,288,266,168,19,24,157,148,22,2313],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v16.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Chinese Bond Market Heats Up: Firm Considers 50-Year Sale<\/title>\r\n<meta name=\"description\" content=\"Amid an unprecedented boom in bond issuance as borrowing costs plummet to record lows, a state-owned Chinese firm is contemplating\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.xtrememarkets.com\/US\/chinese-bond-market-heats-up-firm-considers-50-year-sale\/\" \/>\r\n<meta property=\"og:locale\" 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