Defaults Don't Matter as China Junk Spread at Record Low: Chart

Investors are flocking to Chinese junk bonds even as the number of corporate defaults increase. The extra yield that investors demand to hold two-year AA- notes over AAA securities fell to 32 basis points on March 31, the least in data compiled by the ChinaBond clearing house going back to January 2008. There were three defaults last month alone, with a sausage manufacturer, an iron-ore miner and a steelmaker all missing payments and prompting China Securities Co. to warn that failures will escalate. Ratings of AA- or below are considered the equivalent of non-investment ratings globally.

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