Factory data, Biden trillions pledge boost SOE bonds

Corporates' securities also climb but gains are wiped out on benchmark by steep fall in local government debt

Factory data, Biden trillions pledge boost SOE bonds

(ATF) The bonds of China’s state-owned enterprises (SOEs) and private companies climbed Wednesday after data showed another rise in factory output and on bets Chinese firms will benefit from the latest US stimulus plan.

Those gains were overshadowed on a benchmark bond gauge, however, by another steep decline in local government debt after cuts were announced to taxes that would go to regional authorities.

The ATF China Bond 50 Index of AAA rated credits was unchanged at 106.61. It declined 0.32% in March on concern that a global economic recovery will spur inflation. It also slid as more than a dozen issuers made coupon payments, which tend to suppress bond prices and returns. April will see another 22 coupon payments.

Also on ATF

The Enterprise sub-index climbed 0.05% and the Corporate measure added 0.03%.

The Caixin manufacturing PMI edged down, from 50.9 in February to 50.6 in March but was still above the 50-mark, which denotes growth. The official index published yesterday jumped from 50.6 to 51.9.

US President Joe Biden has announced a plan to spend $2 trillion of infrastructure projects, which analysts said would provide a boost to providers of raw materials and other construction supplies the world over.  

The Local Government sub-gauge, the best performing of the ATF bond indexes, fell 0.03%. China will relieve its citizens of 550 billion yuan ($84 billion) in their tax bills to boost the economy, according to a report by Bloomberg. But the savings will be expected from local authority budgets, the report added, placing strain on their coffers. 

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