Chinese banks' bond financing dropped sharply to CNY33b

Analyst sees a shift back to bank loan.

According to Barclays, China banks' new loans posted a strong seasonal rebound in January to CNY1.32trn, vs the consensus estimate of CNY1.1trn and last year’s CNY1.07trn.

In contrast, bond financing dropped sharply for a second month, to CNY33bn.

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We judge there is a shift back to bank loan financing from bond issuance as the corporate bond yield rose and credit spread widened and also the government strengthened regulation on the shadow banking business. As a result, total social financing (TSF) was a solid CNY2.58trn.

This is up from CNY1.23trn in December but comparable with CNY2.54trn last January, suggesting stable demand and financing conditions. Despite the shadow banking regulations, the off-balance sheet lending increased CNY993bn in January, up from CNY556bn in December but comparable to CNY997bn last January.