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Junk Bond Buyers Cheer as Shareholders Meet Debts: China Credit

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Cash-strapped Chinese companies have found a way to keep bondholders happy. Sell stock at a discount to shareholders and use proceeds to repay debt.

Six junk-rated corporates, including Agile Property Holdings Ltd. and Mongolian Mining Corp., have sought as much as $1.44 billion from rights issues at an average discount of 40 percent over the past four months. Renhe Commercial Holdings Co.’s notes have rallied at least 4.5 percent since its equity offering was announced last week while its shares have dropped 21 percent. The benchmark Hang Seng China Enterprises Index gained 2.7 percent.