Defaults Shake Indifference to Risk in Overheated China Bonds
- Credit spreads widen most since June from seven-year low
- 43 companies have scrapped or delayed sales this month
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China’s corporate bond costs are rising, sales are being pulled and defaults are piling up. For many in the market, those are healthy signs.
This month’s reversal is cooling concern highlighted in a Bloomberg survey that the debt market is “overheating.” While the extra yield on AA- rated corporate notes over the sovereign is on track to jump the most since June this month, it is rising from a seven-year low. A total of 43 Chinese companies scrapped or delayed 46.7 billion yuan ($7.3 billion) of bond sales this month. That won’t make much of a dent on record issuance of 6.7 trillion yuan this year.