Over-leveraged Chinese SoEs causing concern

Asia’s debt markets have taken a pause, but year-to-date volumes for China dollar debt are at record highs nonetheless.

Chinese issuers have raised $33 billion from the dollar bond market so far this year, more than double the $14 billion raised during the same period last year and exceeding the $29 billion raised during the whole of last year, according to Dealogic.

However, amid these record volumes, there are concerns over the level of borrowings for Chinese companies and the structures such companies use to access the offshore bond markets. In early May, Morgan Stanley downgraded its outlook on Chinese investment-grade state-owned enterprises SoEs to neutral,...