Last year, the dollar bond market had the worst year in six years, not only for China but for the entire Asian region. However, foreign investors see strong fundamentals in many sectors and expect support from policymakers through 2019.

Dollar-bond sales by Chinese companies had a bumpy year in 2018, with issuance registered around 180 billion U.S. dollars, a 23-percent decline from 2017. Experts attribute it to a period of overall domestic credit tightening brought by the deleverage campaign last year.

“We saw a polarized situation in the primary market. Those investment-grade issuers still perform well, while those high-yield bond issuers, represented by property developers, suffered with rising financing cost during last year,” said Cheng Chuange, deputy CEO of Bocom international holding company.

January 2019 was a turning point for the dollar bond market. Property issuance volume surged to a record 12 billion U.S. dollars in January. Analysts said real estate issuers are riding on the very positive market sentiment as a result of a more dovish Fed and more support from domestic policymakers.

Yang Lei, vice president of China Chengxin international credit rating company, commented that the opening up of the Chinese capital market has made foreign investors more familiar with both onshore and offshore Chinese bond issuers.

“I saw increasing foreign investors buying dollar bond issued by Chinese companies. If a fund manager wants to balance his portfolio and pick one among all the Asian dollar bonds, these Chinese bonds already proved to be competitive. Chinese regulators are also expected to expand the quota and loosen the restrictions for dollar bonds issuance,” said Ricco Zhang, director of Asia Pacific International Capital Market Association.

China's domestic liquidity condition and financial regulatory environment are the biggest factors in dollar bond insurance. Wang Jinbin, vice dean of the school of economics at Renmin University of China, cited January's M2 supply that maintained a steady and prudent pace.

“We will see an overall stable financial environment with the continued campaign of deleveraging. To boost the economy, there's still potential for existing fiscal policy to become more proactive, like expanding the tax reduction volume in VAT sector,” Wang added.