Domestic U.S. dollar loan interest rates There are no national regulations on U.S. dollar loan interest rates.

Each bank quotes based on its own circumstances.

At present, the domestic short-term U.S. dollar loan interest rate is around 2.25%. The central bank's interest rate policy in 2004 was to promote higher interest rates, while the U.S. dollar interest rate is still trending lower. This obvious loan interest rate shows no sign of narrowing in the near future. Therefore, companies are interested in foreign exchange loans.

Demand continues to rise.

Under the current circumstances where the RMB interest rate is higher than that of the US dollar and there is appreciation pressure on the RMB exchange rate, some domestic enterprises and individuals, based on their own circumstances, have reduced their holdings of foreign exchange assets and RMB liabilities and increased their RMB assets and foreign exchange loans.

U.S. dollar loan interest rates in 2022. According to the forecast released by the U.S. Federal Reserve Fund in December 2020, the U.S. dollar loan interest rates in 2022 are expected to be 0.85-1.10%.

This level will remain unchanged from 2021, but will remain at 0.15%-0.2% interest rates most of the time.

The reason for the increase in foreign exchange borrowing costs is to gain an in-depth understanding of the overseas financing costs of domestic enterprises. Recently, the General Office of the People's Bank of China organized 11 branches of the People's Bank of China, including the Shanghai Headquarters, Guangzhou, and Nanjing, as well as five commercial banks including the Industrial, Agricultural, Commercial Bank of China, China Construction and Minsheng.

Conducted special research.

The research team of the General Office of the People's Bank of China stated that from the overall survey situation, since the second half of 2018, affected by the monetary policy changes of major central banks around the world and the tightening of offshore RMB liquidity, the cost of financing from overseas has continued to rise, and domestic and overseas interest rates have continued to rise.

The gap continues to narrow, and the advantages of overseas financing have significantly declined.

Comparing domestic and overseas financing costs should be comprehensive. The above survey believes that the financing costs of different financing methods and different currencies should be comprehensively compared.

In addition to interest, the overseas financing costs of enterprises also include: 1. Currency conversion costs.

When an enterprise uses funds raised overseas for domestic use, it will cost a certain amount of money to convert them into RMB.

2. Foreign exchange lock cost.

Due to exchange rate changes, there will be a difference between the actual overseas financing amount denominated in RMB and the planned financing amount. In order to eliminate uncertainty, the enterprise needs to pay a certain fee to lock in the exchange rate risk.

3. Tax costs.

Corporate overseas financing needs to bear higher taxes and accounting, consulting, roadshows, underwriting and other expenses.

At the same time, when overseas funds flow back into the country, financial institutions need to pay value-added tax, income tax, etc., and these costs are usually passed on to financing companies.

4. Time cost.

In addition to normal market procedures, overseas financing also needs to be filed or approved by relevant overseas and domestic administrative departments. The procedures are cumbersome and time-consuming.

To this end, this survey conducted a comparative analysis of domestic and overseas financing costs of enterprises from the perspective of comprehensive costs.

The comprehensive cost of overseas U.S. dollar loans continues to rise. In recent years, the comprehensive cost of overseas U.S. dollar loans has continued to rise.

A survey of 20 banks by the Hangzhou Central Branch of the People's Bank of China showed that since 2016, the comprehensive cost range of overseas U.S. dollar loans has increased by about 0.5 percentage points year by year, and is currently about 4.35% to 4.5%.

A sample survey of 155 loans by the Shenzhen Central Branch of the People's Bank of China showed that the average interest rate of overseas U.S. dollar loans since 2018 has been 3.8%, an increase of 91 basis points from 2.89% in 2017.

Banks report that the current one-year overseas US dollar financing interest rate (tax included) is basically above 2.9%. If the cost of foreign exchange lock-in and domestic guarantee fees are also taken into account, the comprehensive cost is above 4.35%. There is almost no difference in the comprehensive cost of domestic and overseas financing.

, the wait-and-see sentiment of enterprises in overseas financing has increased significantly.

The current comprehensive cost of overseas U.S. dollar loans continues to rise mainly due to factors such as the Federal Reserve's continued interest rate hikes and the European Central Bank's expected tightening of monetary policy, which have driven up the U.S. dollar cost in the global financial market.

In November 2018, the 1-year LIBOR (London Interbank Offered Rate) was 3.1%, an increase of 31 basis points from the end of June; at the end of November, the 10-year U.S. Treasury bond yield closed at 2.99%, an increase of 13 basis points from the end of June.

In addition, the high cost of foreign exchange lock-in when companies use funds is also an important reason for the rise in overseas financing costs.

According to research by the Guangzhou Branch of the People's Bank of China, the current foreign exchange lock-up costs for one-year and three-year overseas U.S. dollar loans are 1.42% and 1.95% respectively; Euro and Japanese yen loans are even higher.

The central branches of the People's Bank of China in Hangzhou, Ningbo, and Qingdao reported that many companies did not carry out exchange lock operations because they were unwilling to bear the high cost of foreign exchange locks, which resulted in serious losses.

For example, a company in Ningbo failed to hedge the foreign exchange exposure of US$400 million of funds that were repatriated for domestic use. In addition, the price of RMB against the US dollar was high at the time of the previous issuance of US dollar bonds, resulting in a huge loss of approximately RMB201 million.

The cost of overseas US dollar bond issuance has increased, with real estate companies and local financing platforms being the main force. In recent years, the Federal Reserve has continued to raise interest rates and the US dollar index has continued to rise. The cost of Chinese-funded enterprises issuing US dollar bonds overseas has increased.

In the third quarter of 2018, the average coupon rate of overseas bonds issued by Chinese-funded institutions was 6.24%, an increase of 1.35 percentage points from the fourth quarter of 2017.