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China’s Credit Rebound May Spell Trouble for Huarong Investors

  • Spreads on investment-grade dollar bonds are tightening again
  • Lack of broader selloff may limit support for the company
China Huarong’s Worsening Bond Rout Stokes Market Contagion
Photographer: Lam Yik/Bloomberg
Updated on

Market contagion surrounding China Huarong Asset Management Co. is fading less than six weeks after credit investors reeled at the prospect of a default by one of the country’s most important state-owned companies.

But while the tentative recovery is good news for Beijing’s attempts to instill more credit-market discipline without triggering a financial crisis, it could be a bad omen for any China Huarong bondholders still counting on a government bailout to make them whole.