China's Hot Property Market Helps Cut Asian Junk Bond Yields

  • Asia's riskiest borrowers trim bond costs to seven-month low
  • Marks reversal after yields rose to near two-year high in Feb.

China’s hot property market is helping cut yields on Asian junk bonds to seven-month lows.

The yield on securities denominated in dollars has slid 30 basis points to 6.94 percent from a near two-year high of 7.24 percent in February, according to a JPMorgan Chase & Co. index. The reversal comes as the rally in Chinese real estate, which accounts for about one-third of the nation’s economy, eases broader concerns that had sparked turbulence in global financial markets.

New-home prices in China rose last month in the most cities since March 2014, led by gains in major hubs after banks eased credit and the government loosened curbs. The value of property sales in January and February surged 43.6 percent from a year earlier, while property sales in some mid-sized cities doubled.

“The jump in Asian high-yield bond prices is because of a rally in broader macro markets, especially China property where fundamentals were strong as the residential market picked up,” said Gaurav Singhal, a credit analyst at Nomura Holdings Inc. in Hong Kong.

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