Hong Kong’s syndicated loan market enjoyed a record first quarter as Chinese companies shunned local financing in favor of cheaper offshore funds.
Lending in the city surged 41 percent to $20.8 billion in the first three months compared with a year earlier, the busiest start since Bloomberg starting tracking the data in 1999. Volumes in China shrank 45 percent to $5.8 billion, the worst first quarter in four years. Onshore borrowing costs for the nation’s top-rated companies jumped 30 basis points to 5.89 percent in March, the biggest monthly rise since November, ChinaBond data show.
Hong Kong is luring Chinese companies as interest rates surge in the world’s second-largest economy amid lending curbs and its first onshore bond default. In the three months through March, borrowers led by Cnooc Ltd. (883) and Dongfeng Motor Group Co. agreed offshore loan margins that averaged 227 basis points more than benchmark rates, down from 254 a year earlier.
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