Loading ...It’s somewhat confounding why it took the marketplace so long to lose confidence in Lehman’s short-term liabilities. A creeping process suddenly careened at lightning speed. I won’t venture a guess as to when the market panics over Beijing’s unworkable Credit system backstop. But it seemed clear this week that contagion effects attained important momentum.
July 4 – Bloomberg (Alice Huang): “Financial strains among Chinese property developers are hurting the Asian high-yield debt market, where the companies account for a large chunk of bond sales. That’s widening a gulf with the region’s investment-grade securities, which have been doing well amid continued stimulus support. Yields for Asia’s speculative-grade dollar bonds rose 41 bps in the second quarter…, versus a 5 bps decline for investment-grade debt. They’ve increased for six straight weeks, the longest stretch since 2018, driven by a roughly 150 bps increase for Chinese notes.”
An index of Chinese yield-high dollar bond yields ended the week at 10.43%, up about 70 bps for the week. This index traded with a yield of 8.00% as recently as May 26th. The yield surge of the past six weeks has been the sharpest since the March 2020 crisis period.
Troubled behemoth developer Evergrande’s four-year bond yields traded above 25% this week. Modern Land China’s three-year yields jumped to 18.8% (one-month gain 400bps). Developer Sichuan Languang Development Co. is a risk of defaulting on a payment due Sunday.
Troubled behemoth developer Evergrande’s four-year bond yields traded above 25% this week. Modern Land China’s three-year yields jumped to 18.8% (one-month gain 400bps). Developer Sichuan Languang Development Co. is a risk of defaulting on a payment due Sunday.