Loans cap call lifts bets on corporate bonds

Investors anticipate borrowers will make more visits to capital markets after PBoC calls for caps on loans

Loans cap call lifts bets on corporate bonds

(ATF) A key gauge of Chinese corporate bonds climbed the most in six weeks Tuesday on bets businesses will turn to capital markets for financing after the central bank called for caps to bank loans.

Corporate, financial and local government debt all rose while a gauge of state-owned enterprises (SOEs) fell after a leading issuer made a coupon payment.

The benchmark ATF China Bond 50 Index climbed 0.03%, the most since the middle of February, to 106.66. That was the second day of gains after the measure posted its worst month since April 2020.

Also on ATF

The People’s Bank of China urged lenders to slow their loan issuance on concern that destabilising levels of debt are forming within the economy, according to a report by Bloomberg.

The call came after banks advanced almost 5 trillion yuan of loans this year - 16% more than the same time last year, the report said. The central bank has called for lending to be limited to the almost 20tn yuan lent last year, the report said.

Of the ATF sub-indexes, Corporates rose 0.04%, Financials 0.03% and Local Governments 0.04%.

The SOE-laden Enterprise sub-gauge fell 0.07% after China Resources Land made a coupon payment on its 5.23% bond due in April 2023.

 

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