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China Developers' Dollar Junk Bond Euphoria Seen Having Legs

  • Yields on junk dollar debt from builders tightened this year
  • Base case is supportive environment will remain: BNP Paribas
Chinese Stocks Continue Wild Ways as Financials Lead Rebound
Photographer: Qilai Shen/Bloomberg
Updated on

After the strongest start to a year since 2012, Chinese developers’ junk-rated bonds still offer value with fund managers saying stimulus policies and cheap valuations will keep fueling the rally.

Chinese high-yield notes denominated in dollars, mostly from developers, have handed investors a 6.6 percent return since January. The yield, which was at 9 percent on Wednesday, is still 100 basis points higher than the five-year average, according to an ICE BofAML index. The easing that’s been quietly going on over property curbs has also given investors confidence in this heavily indebted sector.