Companies across China are taking advantage of the coronavirus outbreak to shore up their balance sheets, as Beijing urges them to issue cheap bonds to support the world’s second-biggest economy.
More than 25 Chinese businesses, ranging from airlines to drug distributors, have raised Rmb24bn ($3.4bn) by selling “virus control” bonds since the start of February, according to Huatai Securities. Another 20 have announced plans to raise money in the coming weeks, as the outbreak shows few signs of tapering.
Regulators have encouraged the sales of virus-linked bonds by cutting the approval process from weeks to days while urging state-backed banks to buy them. To qualify for the programme, companies must commit to spending at least 10 per cent of the proceeds on measures to combat the epidemic, which has already led to more than 1,800 deaths and made a big dent in the economy. Analysts think China’s gross domestic product growth could fall as low as 3 per cent in the first quarter, from 6 per cent at the tail-end of last year, with a lot of industrial activity across the country currently offline.