Chinese New Bond Yield Gap Hides Debt Risks as Defaults Rise
- China Wanda’s new bond yields much lower than secondary market
- Structured issuance among factors for big yield differential
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As China moves toward a more market-based approach to determining the cost of money in its economy, one metric suggests corporate debt is going in the opposite direction.
Some 17% of company bonds in the first half were sold at yields at least 50 basis points below rates in the secondary market, according to data from China Chengxin International Credit Rating Co. That’s a jump from 9.9% in the second half of 2018. Globally, only the most in-demand issuers can raise funds in line with where their existing debt is trading; almost everyone pays a premium.