>Evergrande crisis locks Chinese developers out of global debt market
>Industry’s issuance of dollar bonds slows to a trickle in the first quarter of 2022
>High yield dollar bond issuance by Chinese developers during the year to date is down a record 97 per cent compared to the first quarter of 2021, according to Financial Times calculations based on data from Refinitiv.
>So far just two deals worth less than $295mn in total have gone through, compared with more than $8.7bn in the first three months of last year raised across 30 deals. At the same time, developers’ costs to borrow on international markets has leapt to an all-time high.
>The drought in issuance and soaring borrowing costs highlight how the crisis at Evergrande is bleeding more widely across the market, and may make it prohibitively expensive for companies in the sector to either raise new debt or refinance existing borrowings. Mounting worries about disclosures from property developers have added to the angst.
>“There’s hardly any [deals] being done,” said the head of China debt capital markets at one international bank, who added that even larger, more robust developers were beginning to feel pressure from the lack of ready access to global capital markets. “All of them have some debt maturing...”
>Rising yields, which make it more expensive for developers to access the cash they need to run their highly indebted businesses, also signal a significant further deterioration in market sentiment from early February, when they traded close to 20 per cent.
>The average yield on a Bank of America index tracking Chinese high-yield bonds jumped to 32.9 per cent in March, beyond the previous high of almost 32 per cent in 2008, at the height of the global financial crisis.
tldr: debts accruing, no new investment, old investors pulling out, record capital outflows from China = Chinese asset bubble is finally bursting
