Flight to Safety Undermines China's Efforts to Help Risky Firms
- Investors seek sovereign bonds, top-rated corporate debt
- China officials want more cash to flow towards private firms
This article is for subscribers only.
Chinese investors are snapping up the safest assets in the bond market, complicating authorities’ efforts to help revive the economy by directing funds into cash-strapped private firms.
Traders are piling into corporate debt with high credit ratings, and bonds sold by the central government and local authorities, according to data compiled by Bloomberg. Junk notes, many of which are sold by the kind of smaller private companies that officials vowed to support, are falling out of favor; spreads are at the widest in almost seven years.