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China Junk Bonds Pose Most Risk Since ’04 on Credit-Quality Dips

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Investors in Chinese junk bonds are taking the biggest gamble in at least a decade.

Leverage for speculative-grade Chinese companies is at its highest since at least 2004, whether measured by earnings relative to interest expense or total debt to a measure of cash-flow, according to data compiled by Bloomberg using a Bank of America Merrill Lynch index. Borrowers have also piled on the most debt relative to their assets since 2007.