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Chinese firms delay or cancel $10 billion bond issuance in April

Published 04/19/2016, 12:33 AM
Updated 04/19/2016, 12:33 AM
© Reuters.  Chinese firms delay or cancel $10 billion bond issuance in April

© Reuters. Chinese firms delay or cancel $10 billion bond issuance in April

SHANGHAI (Reuters) - Chinese firms have delayed or canceled at least 68.8 billion yuan ($10.63 billion) of bond and other fixed income issuance so far in April, bond market data sources showed on Tuesday.

Around 70 firms have delayed or canceled issues, many in excess capacity industries including cement and mining, according to data compiled from China's two main clearinghouses for the interbank market and the interbank market operator.

An increasing number of Chinese firms in excess capacity industries have encountered repayment difficulties this year as economic growth slows and the government pushes on with painful structural reforms. That has led to higher rates of canceled bond issues as investors shy away from those sectors.

Chinese fixed income yields, including treasury rates, have moved up noticeably since the beginning of the month in what traders and analysts say is a reaction to signs of strong supply growth and reduced expectations of further monetary easing, in addition to a rash of defaults by industrial firms including Dongbei Special Steel Group Co Ltd.

Benchmark five-year treasuries (CN5YT=RR) are up 17 basis points since the beginning of April, although sharp rises following last week's strong March activity data appear to have leveled off.

A separate report from the online financial magazine Caixin, using only data from the market operator, found that close to 60 billion yuan of debt had been canceled or delayed in April.

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