January 16, 2024 | Daily JAM, Mid Term |
Chinese officials have indicated that the government is considering issuing 1 trillion yuan ($139 billion) of new debt under a special sovereign bond plan. The plan would sell ultra-long sovereign bonds to fund projects related to food, energy, supply chains, and urbanization. The sale of this type of ultra-long bonds is rare: In the aftermath of the Asian Financial Crisis in 1998, for example, the government issued special debt to replenish capital for major state-owned banks. The most recent sale was in 2020, when authorities issued 1 trillion yuan worth of those bonds to pay for pandemic response measures. The new round of stimulus is good news for a global economy that has been struggling with lagging growth as China’s economy has slowed. But the plan is bad news for anyone worried about the deep structural problems facing China’s economy.
December 5, 2023 | Daily JAM |
Moody’s Investors Service cut its outlook for Chinese sovereign bonds to negative from stable today, December 5. The rating company kept tws long-term rating on China’s government bonds at A1. You don’t have to be a forensic accountant to see what worries Moody’s.
February 28, 2023 | Daily JAM, Mid Term, Morning Briefing |
The debt crisis at China’s local governments will be top of the agenda when China’s leaders gather in Beijing for the annual parliament next week.m (The nation’s legislators and top leaders meet from this Sunday to approve key economic targets for 2023, including a new local bond quota, the budget, and also monetary policy.) A majority of regional governments — at least 17 out of 31 — are facing a serious funding squeeze, with outstanding borrowing exceeding 120% of income in 2022
February 21, 2022 | Daily JAM, Mid Term |
The People’s Bank of China increased its cash injections into the financial system via reverse repos to 100 billion yuan ($15.8 billion). That resulted in a net injection of 90 billion yuan. The PBOC had been draining cash in the last two weeks, which is routine following the Lunar New Year holiday.
October 5, 2021 | Daily JAM, Morning Briefing |
Yesterday Fantasia Holdings Group became the latest property developer to fail to repay a maturing bond. That, plus ratings down grades, put Chinese junk dollar bonds on the edge of their biggest selloff in at least eight years, according to Bloomberg calculations, and pushed yields near a decade high. Fantasia’s missed payment “provides a clear sign that despite piecemeal bailouts of select Evergrande assets, property market stresses remain elevated,” Craig Botham, chief China economist at Pantheon Macroeconomics, told Bloomberg “The rot is unlikely to stop here.” Traders and investors are clearly worried that other real estate companies will be sucked into the debt crisis
September 29, 2021 | Daily JAM |
China Evergrande got into trouble by raising money by selling unregulated investment products to ret... To subscribe to JAM you need to fill in some details below including, ahem, some info on how you'll pay us. A subscription is $199 (although if you're subscribing...
January 11, 2018 | Daily JAM, Short Term |
Yesterday a report from Reuters that Chinese officials had recommended slowing that country’s purchases of U.S. Treasuries rattled the bond market. Today a Bloomberg story adding up the hundreds of billions in debt that Chinese companies have coming due this year doesn’t seem to have had much effect on bond markets. In fact the yield on the 10-year Treasury fell by 1 basis point to 2.54% as bond prices rose today, January 11.
October 19, 2017 | Daily JAM, Mid Term, Morning Briefing |
Apparently it’s one thing for foreigners, such as Fitch Ratings or Moody’s Investors Service, to warn of an impending debt crisis in China. Chinese financial markets have by and large shrugged off such warnings. But it’s another thing entirely when the Governor of the People’s Bank of China, Zhou Xiaochuan, issues a very similar warning.
September 21, 2017 | Daily JAM, Morning Briefing, Volatility |
Standard & Poor’s lowered its credit rating on China’s sovereign debt by one step to A+ yesterday. The cut is the first ratings reduction since 1999. S&P cited the risks from the growing debt levels in China’s government and corporate sector as grounds for the lower rating.
June 28, 2017 | Daily JAM, Uncategorized |
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April 10, 2013 | Daily JAM, Mid Term, Morning Briefing |
Yesterday Fitch cut China’s long-term local currency credit rating from AA- to A+. Because of the uncontrolled growth of China’s shadow banking sector, Fitch said, total credit may have reached 198% of GDP by the end of 2012, up from 125% in 2008. Despite the downgrade, the iShares FTSE China 25 ETF (FXI) is up 0.99% as of 12:30 p.m. New York time today.
November 21, 2011 | Uncategorized |
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