Capital curbs push China firms to risky, costly debt

Shanghai

CHINA'S efforts to support its currency and cool its hot property market are encouraging more Chinese companies, including many state firms, to take on extra cost and risk by raising foreign-currency bonds in Hong Kong and other offshore locations.

Despite the yuan's nearly 7 per cent slump against the dollar in 2016, Chinese companies including state-owned Bank of China raised a record US$111 billion in offshore dollar bonds, according to data from Dealogic, up from US$88 billion in 2015.

JPMorgan analysts, using their own dataset, are forecasting another rise this year, even though many economists expect the yuan to fall further, making the loans more expensive to service and repay.

The list includes issuers who need dollars to pay for overseas acquisitions and deals but are unable to use their yuan after China tightened its grip on capital outflows last year to support the currency…