A gap has opened up between rates on junk bonds from China and the U.S., fueling interest in higher-yielding Chinese debt.
This year is likely to bring a series of defaults from China after a string of blowups in 2020. But some investors say they are being compensated well for the risk—and Chinese companies are still less likely to run into financial trouble than their American counterparts.
As of Monday, yields on an ICE BofA index of Chinese offshore high-yield corporate bonds stood at 9.18%, a roughly 4.5-percentage-point premium over U.S. yields. That gulf has largely been driven by a rally pushing down U.S. yields and contrasts with an average difference over the last 10 years of 2.15 percentage point.
At the same time, about 2.5% of Chinese offshore high-yield debt by face value is likely to default this year, according to forecasts from JPMorgan Chase & Co. credit analysts led by SooChong Lim. The bank’s equivalent U.S. forecast is 3.5%.
“China high-yield is extremely cheap versus U.S. high-yield,” said Jean-Charles Sambor, head of emerging-markets fixed income for BNP Paribas Asset Management.
The Link LonkFebruary 16, 2021 at 05:00PM
https://www.wsj.com/articles/why-2021-promises-a-fresh-wave-of-defaults-from-corporate-china-11613469603
Why 2021 Promises a Fresh Wave of Defaults From Corporate China - The Wall Street Journal
https://news.google.com/search?q=fresh&hl=en-US&gl=US&ceid=US:en
No comments:
Post a Comment