China’s Companies Raise Record $14 Billion in Offshore Convertible Bonds as Market Sentiment Shifts

China’s leading companies have made a significant move by raising a record US$14 billion in offshore convertible bonds this year. This surge comes as companies look to meet future funding needs while interest rates remain high. So far, businesses from mainland China have accounted for 22 percent of global convertible bond deals. Notable transactions in recent months include Alibaba Group’s US$5 billion offering in May and Ping An Insurance’s completion of a US$3.5 billion deal last week. By comparison, the figures from this year are dramatic, with this amount representing a staggering 1,588 percent increase from the same period in 2023, when only US$829.3 million was raised.

The rise in convertible bond issuance is aiding hopes for a revival in capital markets, particularly in Hong Kong, where initial public offerings (IPOs) are at their lowest level in 15 years. According to Saurabh Dinakar from Morgan Stanley, the typical recovery of the market generally starts with blocks, primary equity financing, and convertible bonds before moving onto IPOs. While recent years have shown little activity, there are signs of returning confidence among international investors regarding investments in Hong Kong and China. “I think what’s changed over the last three months is that some of the confidence has returned,” Dinakar noted.

Global trends echo this optimism, with US$64.2 billion worth of convertible bonds issued worldwide in 2024. Other Asian countries, particularly Japan, have also seen a substantial increase in deal values. Bank of America has responded to these developments by raising its forecast for global convertible bond issuance, now expecting up to US$110 billion in deals for the current year. This elevated interest marks a shift in investor focus towards Chinese markets, as they reconnect after stepping back during the pandemic. While caution remains, the growing dialogue about investment opportunities in China reflects a positive sentiment in the financial community.