Ranks of first-time debt issuers on the rise

More freshmen issuers are turning to the bond market as banks - under pressure to safeguard asset quality and meet capital ratios - grow more selective about borrowers and firms try to broaden their sources of funds.

Corporate bond deals from first-time issuers accounted for 37.6 per cent of all deals from mainland and Hong Kong issuers in the year's first eight months, almost double the proportion in 2010, Dealogic data shows.

Bond issuance has grown more slowly since June as yields of benchmark US treasuries increased, reflecting a higher cost for issuers.

But bankers said mainland property developers and resource firms were still hungry for capital and some of them might make a first attempt to raise funds through a bond issue, given banks' reluctance to lend to highly leveraged borrowers.

Mainland and Hong Kong corporate bond issuance rose 18.1 per cent in the year's first eight months from a year earlier to US$261.5 billion. This translates to more than 1,000 new bond issues, and 407 of them were from freshmen issuers. Debut issuance rose 5.8 per cent to US$66.8 billion, Dealogic said.

Raising funds in a sluggish equity market could be more difficult, prompting more firms to issue their first bonds, said Ginger Cheng, the managing director of DBS Hong Kong's institutional banking group.

The Hang Seng Index has edged down 0.1 per cent this year, and the Shanghai Composite Index has fallen 5.7 per cent.