China's dollar corporate bond sales reach new highs

China's corporate dollar bond market is experiencing a notable recovery. This comes after companies have sold about $13 billion in dollar-denominated bonds in 2025 so far. This amount is double what was sold last year and the highest since 2022. The resurgence is driven by optimism around artificial intelligence and government actions aimed at stabilizing the struggling property sector. Financial firms and local government financing vehicles are leading this rebound. However, some property companies, which had been absent from the market for years, are returning. Investors are becoming more positive due to improved sentiment in the credit market. Major tech companies are competing to advance their AI products, while the Chinese government is working to prevent defaults in the property market. There are also concerns that political tariffs from the US could harm its economy, making Chinese bonds more attractive to investors. Chinese investment-grade bonds are currently trading with tight spreads. For instance, notes from Tencent Holdings are at their narrowest spreads in five years. Meanwhile, Chinese high-yield bonds are showing lower premiums compared to US bonds, indicating strong demand. Some local companies are re-entering the market despite ongoing challenges with property sales and debt issues. Recently, Beijing Capital Group sold a dollar bond for the first time since 2021, with demand far exceeding supply. Analysts expect Chinese dollar bonds to perform well due to limited supply and local support. In February, China's investment-grade dollar bond index recorded its best monthly performance in over a year. The high-yield index also performed well, outperforming its European and US counterparts. However, some experts suggest that without the return of foreign investors, it is difficult to determine if the market's overall sentiment has truly improved.