Devaluation Of The Renminbi Is A Double-Edged Sword. Some People Are Happy And Sad.

The appreciation of the dollar, the depreciation of the local currency, the decline of the economy, the difficulty in running the business, and the shrinking of the cash flow are just like a rope tightly tied to the neck of the enterprise, making it difficult to get rid of it. Some enterprises will gradually run out of the last bit of wealth.

The calculation of the paction, because the interest rate level is relatively low, there is a good exchange rate gain. It is not known that in the second half of 14 years, with the end of the QE period, the US dollar has entered a long-term upward channel. However, the RMB exchange rate is generally stable, and the debt risk of the US dollar is not yet obvious. After entering 15 years, the United Nations Department has repeatedly hinted that interest rates should be raised. The US dollar index is even higher. The RMB exchange rate is also dropping. The 18 China foreign exchange trading center announcements that the central parity of the people's currency against the US dollar is 6.8796, down 104 basis points from the previous trading day, and has fallen for the eleventh consecutive trading days, and once again hit a new low since August 2008. At the same time, it has set a record of the longest fall since June 2005. 14 years ago, the renminbi was in an upward trend, and the risk of US dollar debt remained relatively small.

On the shore and offshore RMB, both sides dived for nearly 200 points, while the offshore renminbi fell to the 6.89 barrier against the US dollar, and the offshore renminbi dropped below 6.91.

Companies that seek cheap dollar may get into a big trouble. Exchange losses may become a heavy burden. With interest rates rising, the dollar debt Carnival may become a shackle for Chinese enterprises. If indeed, as some analysts say, the depreciation of 5% of the national currency next year, or even about 7.30, will mean that the company's dollar debt will increase by 5% of its capital cost or financing cost. The US dollar debt will lead to a large amount of wealth being swallowed up by the appreciation of the dollar, and even lead to bankruptcy and bankruptcy of some enterprises.

The most concentrated issuance of US dollar debt occurred after 2012.

Borrowing relatively cheap US dollar debt.

At the beginning, there were more real estate companies with tight capital chains. After 2013, the issuers of SOEs entered the US dollar debt market. After they issued bonds, the funds of these enterprises were often used to purchase overseas assets and carry out mergers and acquisitions.

Although the RMB exchange rate has declined, enterprises have reduced the issuance of US dollar bonds, but the growth momentum is still undiminished. Dealogic data show that in the second half of 2014, Chinese funded enterprises issued about $27 billion 700 million in foreign dollar denominated debt.

Circulation in the second half of 2015 fell to $15 billion.

The depreciation of RMB has increased the expenditure of enterprises. Enterprises must convert the RMB into US dollars to repay the interest and principal of offshore loans. According to the UBS group's 14 dollar China dollar debt, the foreign exchange debt of China's US $1 trillion has not been hedged, because it is expected that the US dollar will go up.

In December 7th, the bank for International Settlements released quarterly reports that the continued rebound of the US dollar may damage the credit of certain enterprises, thereby exposing the financial fragility of emerging markets. China's US dollar debt is also part of the BIS report.

The report said that in just 18 months, the total amount of cross-border bank loans to China has increased more than doubled to $1 trillion and 100 billion, while the total debt borrowed by Chinese people in the form of international bonds has reached US $360 billion.

In the 15 years, the renminbi

The negative effects of the decline have gradually emerged. According to WIND data, according to the semi annual report 2015, 846 of the 2045 listed companies that disclosed the exchange gains and losses in the first half of last year suffered exchange losses and the total loss amounted to 8 billion 26 million 540 thousand yuan.

In August, 15, China's central bank announced a one-off depreciation of the RMB exchange rate of 1.9%. According to Bloomberg data, the debt of Chinese enterprises increased by 10 billion.

According to the data of January this year, the principal and interest of US dollar bonds that Chinese enterprises should repay in 2016 reached US $9 billion 700 million.

By 2018, this figure will increase by two times to $32 billion 500 million.

As of 4 p.m. on April 1, 2016, nearly 900 companies in the Hong Kong and Hong Kong listed companies that had announced the full performance of fiscal year 2015 disclosed the exchange in the period.

The net loss amounts to 47 billion 810 million yuan, 13 times higher than in 2014, and two barrels of real estate aviation is the worst hit area.

The threat of Chinese companies' dollar debt is due to a lack of hedging mechanism. Moodie analyst Ivan Chung said, "most Chinese companies do not hedge their foreign exchange risks.

The sudden devaluation of the RMB will increase the pressure on offshore dollar debt of the company, especially those of the real estate industry which rely heavily on offshore debts. In fact, the excessive dependence on the US dollar by the aviation industry has become the biggest victim. According to Bloomberg statistics, the total maturity bonds and debts of Chinese real estate developers in 2015 were as high as 24 billion US dollars. In view of the real estate enterprises' dollar debt risk, Li Guoyi, director general of the rating Department of the Greater China region in Hongkong, pointed out.

"If the RMB devaluation trend continues, they will face enormous debt repayment pressure."

Because "China's real estate developers have a large number of outstanding overseas debts, some of which have more than 20% of overseas debt in their total debt, while most companies have high leverage and poor cash flow."