Chinese companies suffer an intense cash crunch in offshore bond markets

GLOBAL INVESTORS are all too aware of the discount on the valuations of mainland firms as a result of Xi Jinping’s aim to lower leverage, house prices and inequality in China. Borrowers, for their part, must contend with a “Xi premium” on sorely needed capital. The Chinese leader’s policies may have led to a perilous credit crunch for many companies, especially property developers, in global markets.Regulators have shaken the foundations of China’s property market by toughening up on the amount of leverage developers can take on. This has pushed Evergrande, a home builder with more than 1,000 projects across China and $300bn in liabilities, towards collapse. It has missed five payments on offshore-dollar bonds in the past month. Several rivals have followed suit. Fantasia defaulted on offshore bonds on October 4th. Sinic Holdings said on October 11th that it would probably default soon. Modern Land and Xinyuan Real Estate are hoping to delay payments on offshore bonds.