Chinese Junk-Bond Yields Surge to Decade High as Property Developers Continue to Miss Payments


International investors have sold their junk-bond holdings of Chinese property developers, driving borrowing costs to a decade high and further restricting the capacity of cash-strapped developers to access critical funding. The average yield on an ICE Data Services index of Chinese high-yield dollar bonds, which property companies dominate, surged to close to 30 percent recently, up from 14 percent at the beginning of September, according to Financial Times. The surge has pushed the leading barometer of borrowing costs to its highest level since the 2008 global financial crisis. Junk bonds, also known as high-yield bonds, refer to those with credit ratings lower than investment grade—BB-plus or lower by S&P Global Ratings and Fitch Ratings or Ba1 or lower by Moody’s Investors Service. They’re deemed more likely to default, but could offer investors a better payoff for the risk. Worldwide concerns have mounted recently over a string of missed bond payments …

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