China Bank-Backed Dollar Bond Sales Plunge Amid Default Jitters
- Dollar bond sales with standby letters of credit slump 90%
- Lenders reluctant to provide pledges as defaults mount
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Cash-strapped Chinese borrowers are losing another funding avenue, as default jitters rock a market that relies on quasi guarantees from banks for repayment.
Sales of China dollar notes carrying a so-called standby letter of credit, effectively a lender’s pledge to repay if the issuer can’t, slumped 90% to $1.04 billion so far this year from the previous year, according to Bloomberg-compiled data. This outpaced a 52% drop in China dollar bond sales to $52.2 billion for the same period, the data showed.