China’s Companies Scrap $1 Billion in Bond Sales as Yields Jump

China’s companies scrapped or delayed at least 7.55 billion yuan ($1.2 billion) of bond sales since Nov. 20 as borrowing costs jumped, flagging fundraising strains even as the central bank eased monetary policy.

The yield on AAA rated corporate securities due in three years rose 17 basis points last week, the most in a year, to 4.43 percent. The increase comes as investors held more cash ahead of planned new share sales this week, with initial public offerings to lock up at least 1 trillion yuan, according to Australia & New Zealand Banking Group Ltd.

China Development Bank Corp. said it would cancel a 5 billion yuan one-year note offering, originally planned for Nov. 25, due to market conditions, according to a statement published on Chinabond’s website today.

Shanghai Fosun High Technology Group Co., a unit of Fosun International Ltd., said it will delay a 2 billion yuan issue that had been scheduled for tomorrow, according to a statement on Shanghai Clearing House’s website today. At least three other companies also canceled offerings, filings show.

Premier Li Keqiang pledged to cut borrowing costs on Nov. 19 with the economy set to grow this year at the slowest pace since 1990, according to the median estimate in a Bloomberg survey of economists. The People’s Bank of China on Nov. 21 lowered its one-year lending and deposit rates for the first time in more than two years.

— With assistance by Judy Chen

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