Guaranteed Loans Are One Sign of Confidence in Chinese Companies
- China, H.K. underwritten loans rise to most since 2019
- Bankers say more underwritten deals to come out in second half
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Even as China’s regulatory crackdown sparks investor jitters toward the corporate sector’s outlook, one part of the loan market is signaling confidence that the nation’s companies will continue to grow.
Debt deals in which arrangers guarantee the entire commitment before syndication have been climbing in China and Hong Kong. So-called underwritten loans suggest arrangers’ optimism in the prospects of borrowers, since the managers will be stuck with more of the debt than they intended to hold if not enough creditors subscribe to it in the primary market. They may need to sell it at a cheaper price later to investors.