Economics
China’s Credit Party Winds Down in Headwind for GDP Growth
- Net issuance drops 39% in August as cutting debt trumps growth
- Decline shows ‘beginning of deleveraging process,’ Xia Le says
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Chinese companies’ borrowing costs have never been so low. That’s little consolation to firms cutting debt rather than investing amid a slowing economy.
The amount of local yuan bond sales minus maturities fell 39 percent in August from a year earlier for non-financial firms to 124 billion yuan ($18.6 billion), data compiled by Bloomberg show. Net issuance since March 31 has slowed to 496 billion yuan after a record 810 billion yuan in the first quarter of 2016. Yields on AA+ and AA rated five-year securities dropped to record lows this month.