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Company ‘Red Flags’ Send Bond Spreads to Records: China Credit

Borrowing costs have risen to record levels for Chinese companies marked with “red flags” by ratings firms for unclear financial reporting and high levels of private ownership.

The extra yield investors demand to own the bonds of Nine Dragons Paper Holdings Ltd., LDK Solar Co. and Road King Infrastructure Ltd. instead of similar-maturity government debt widened to all-time highs after they were named by Fitch Ratings or Moody’s Investors Service for issues such as having changeable profit margins or long-serving independent directors.