TOKYO -- Chinese companies are flocking to newly sanctioned "virus bonds," whose purpose is ostensibly to bankroll expenditures related to the coronavirus outbreak and cover emergency financing needs. But just a week after the first issuance, it is becoming clear that companies are using the new funding instrument primarily to roll over old debts -- another sign that deleveraging in China has taken a back seat to spurring growth.
Officially known as "epidemic prevention and control bonds," the funding instrument was part of a lengthy financial policy package unveiled on Jan. 31 by five central government institutions, including the People's Bank of China, the Finance Ministry, and securities and banking regulators. The authorities pledged to establish a "green channel" that would fast-track any bond issuances related to the virus.
