How Long Can Bond Boom Last?

Issuance of debt securities
China's bond market issuance through July is 1.9 times 2015 levels and nearly as much as all of 2015, while government bond yields hit record lows. Defaults are also up though, at 2.2 times the 2015 pace and already more than all of 2015. This is pushing some investors into government bonds, but with the screws tightening on shadow banks, the bond market remains attractive for financing.

Government bond yields:

Guotai Junan published research reports that investment to accelerate diving, inflation continued to drop interest rates to accelerate downward. Shadow banking contraction caused by credit crunch is likely to exceed market expectations, the agency "asset shortage" upgrade. Investment in downstream and demand-driven mechanism is configured, the rise in the Chinese bond market will be accelerated.

Guoxin Securities issued bonds, review, said, CPI in August will reach lows (around 1.5% -1.6%), inflation worries. Investment growth to continue down the same time from the current understanding of the situation, the bank credit crunch and weak demand for business investment makes August the credit situation is still not optimistic, as the real estate mortgage expected sales growth downstream canoe difficult to support, "wide currencies, tight credit, "the pattern continues, pushing the yield to continue downward.
All is not rosy though. The next chart shows delayed bond issuance or failures, 2.2 times year-ago levels.
More trouble is, from August to the end of this year, the size of the overall maturing bonds will climb to a peak, the total amount reached 4.44 trillion yuan, 20 percent more than last year. Among them, the maturing iron and steel, coal, nonferrous these three serious excess capacity in the industry accumulated debt of nearly 700 billion yuan, a record high, increasing 30% over last year.

Also Bank for International Settlements (BIS) published data show that as of the end of 2015, China's total debt was 254%, while the total US debt was 250% of the debt ratio positive overtake the United States. On the other hand, the US debt ratio rose from 150% to 250% with a 30-year period, while China only 10 years, indicating that China's growth rate of debt faster.

Also according to a rough calculation, as of 2015, Chinese enterprises sector debt total reached 115 trillion yuan, if the average interest rate is 6%, interest payments as high as 6.9 trillion, accounting for industrial enterprises above designated size main income of 62.7%, about 10% of GDP.
Caijing: 债市“刀口舔血”,盛况还能持续多久?

No comments:

Post a Comment