Moody's publishes September RMB Bond Monitor

Moody's Investors Service has published the September edition of its RMB Bond Monitor, which compiles recently published research.

Measures taken by China's government since June 2018 to ease fiscal and monetary conditions should lead to an increase in onshore bond issuance and facilitate more Chinese issuers to refinance their debt in the next 12-18 months, when a substantial amount of onshore corporate bonds will become due.

"However, the benefits of easing measures are unlikely to cascade down to weak issuers because banks and investors will remain concerned about this particular group, and will not expand their credit exposure to them," says Ivan Chung, a Moody's Associate Managing Director.

Moody's also points out that corporate bond issuance in the onshore market slowed in May because of weak investor sentiment, caused in turn by several cases of default during the month.

Net issuance (i.e. the difference between issuance and redemption amount) was negative. However, the easing measures implemented by the government since June boosted issuance momentum from July, with net issuance also increasing.

The articles in this month's Bond Monitor include:

Recent easing measures will alleviate refinancing pressure for all but the weakest issuers

Onshore net issuance increases for AAA and AA+ rated corporates but not for those rated lower

Property - China: Onshore liquidity conditions improve; onshore bond issuance to increase

Non-financial companies -- China: Shareholders' use of share-pledged loans can weaken listed companies' credit quality

Rated non-financial companies - China: More companies are likely to be affected as trade dispute with US escalates

Automotive - China: Auto sales decline poses challenge for automakers

Government of China: Renminbi depreciation has no immediate credit impact; expanded policy tools to manage rise in volatility over time

Subscribers can read the full report at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1137411

The report may also be found through Moody's topic page "China's trade-off: Deleveraging and stability", available at http://www.moodys.com/chinarebalancing. This page provides a centralized source for Moody's research related to key credit issues in China as the country's macroeconomic story continues to unfold.

Recent Moody's publications relating to China's trade-off include:

• Automotive -- China: Auto sales decline poses challenge for automakers

• Banks -- China: Quarterly snapshot of credit profiles

• Government of China -- A1 Stable: Regular update

• Property -- China: Onshore liquidity conditions improve; onshore bond issuance to increase

• Non-financial companies -- China: Shareholders' use of share-pledged loans can weaken listed companies' credit quality

• Quarterly China Shadow Banking Monitor

• Rated non-financial companies -- China: More companies are likely to be affected as trade dispute with US escalates

• Property & casualty insurers -- China: Regulatory focus to curb aggressive risk-taking underpins stable outlook

• Property -- China: Rated developers to face high refinancing needs over the next 12 months

• Inside China: July 2018