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Korean Dollar Bonds Rally as Investors Switch Out of China

  • Spreads on Korean notes fall more than Asian high-grade index
  • Defaults on yuan debt of some Chinese firms hurt sentiment
Updated on

Bonds from South Korean issuers are benefiting from their safe haven status as some investors turn away from Chinese debt after a spate of defaults.

Yield premiums on Korean corporate dollar notes tightened 17 basis points in the past month, while spreads on high-grade debt from Chinese issuers sold in the U.S. currency increased 3 basis points, Bloomberg Barclays indexes show. Korean bonds are also outperforming the Asian regional index.