The cost of offshore loans for Chinese companies has increased marginally so far in 2019 after years of price compression.

The average margin on Chinese firms’ USD- and HKD-denominated loans have edged up slightly so far in 2019 by 2.83bps to 212.85bps, compared with last year, after having trended down for at least five consecutive years since 2013, when it was 283.77bps.

Property developers such as Country Garden and China Overseas Land and Investments have paid higher margins on their most recent loans compared to their past deals. Country Garden’s latest USD 1bn-equivalent facility is paying a margin of L+ 265bps for its two-year tranche and H+ 295bps for the three-year tranche – at least 16bps higher than its USD 1.25bn-equivalent four-year loan signed in 2017. China Overseas Land’s HKD 30bn (USD 3.82bn) five-year facility signed in January pays a 12bps higher margin than what the developer paid on its HKD 18bn (USD 2.3bn) facility of the same tenor in 2017.

Some new deals launched this year are offering the same margins as in the previous year, but are offering higher upfront fees. As an example, Chinese conglomerate Fosun International’s USD 300m-equivalent three-year facility launched this month offers a 40bps higher top-level upfront fee, which translates to a top-level all-in of L+ 250bps on the USD tranche, compared with 236.7bps on its 2018 loan.

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Jason Huang-Jones APAC Data Manager Debtwire