Look Closer: 57% of China AAA Bond Issuers Have Junk-Like Risks
- Bloomberg Default-Risk Model tracks stock, debt, cash metrics
- China Railway Materials rated AA+ prior to bond trading halt
China's Junk-Like 'AAA' Bonds
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So you bought a top-rated yuan bond in China? Take a closer look. It may share characteristics with junk notes in the rest of the world.
About 57 percent of bond issuers listed in China and whose securities are rated AAA in the nation may have default risk consistent with what Bloomberg’s quantitative, independent default-risk model deems a below-investment-grade company. The model tracks metrics including share performance, liabilities and cash flow. It doesn’t take into consideration guarantees or make assumptions about government support, regulations or future earnings.