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Chinese offshore bond issuance spurts ahead

Breakingviews: Chinese offshore bond issuance spurts ahead


(SOUNDBITE) (English) TARA JOSEPH, SAYING:

"Chinese companies looking overseas for financing, Andy. Big name companies like CNOOC and Tencent actually really securing overseas financing despite a weaker yuan."

(SOUNDBITE) (English) ANDY MUKHERJEE, SAYING:

"Well Tara, puzzling isn't it? Well, you know the popular explanation is that Chinese companies are raising funds overseas despite the weaker yuan because credit conditions are tightening at home. Now there is some merit to that argument, especially if you look at the money raised overseas by Chinese property companies. Now they might indeed be tempted to borrow offshore and bring funds onshore because the domestic banking system is not accommodating them as well as it used to before. Now there is, however, another explanation which Peter Thal Larsen of Breakingviews favors, which is that Chinese companies are rapidly globalizing buying assets abroad. And so, they legitimately require foreign currency financing, and therefore they are heading overseas."

(SOUNDBITE) (English) TARA JOSEPH, SAYING:

"So this move overseas, Andy, is it set to continue?"

(SOUNDBITE) (English) COLUMNIST, REUTERS BREAKINGVIEWS, ANDY MUKHERJEE, SAYING:

"Well it is perhaps set to continue. And to see why, you just have to consider the CNOOC deal. CNOOC, as you know, recently did a $4 billion bond sale, dollar denominated. Now that was essentially to partly refinance its, you know, costly acquisition of the Canadian oil and gas company, Nexen. Now, to the extent that deals like this can only increase in size and grow in complexity as China globalizes further, foreign currency fund-raising by Chinese companies can only grow."

(SOUNDBITE) (English) TARA JOSEPH, SAYING:

"Chinese companies moving overseas. Bond issuance part of the plan, it's all happening."

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