Evergrande’s Wild Swings Show Risks in China’s Local Bond Market
- Traders struggle to find buyers for debt as liquidity dries up
- Some of the developer’s onshore notes have plunged this week
The China Evergrande Centre in Hong Kong.
Photographer: Lam Yik/BloombergThis article is for subscribers only.
China Evergrande Group’s wild local bond swings show just how risky it can be to trade stressed assets in the nation’s domestic market.
A plunge in the price of the developer’s yuan bond due 2023 triggered trading halts on Thursday before it closed down a record 32%. The note fell a further 5.2% Friday. Two other Evergrande local bonds saw trading pauses Thursday, coming as the firm’s onshore debt has slumped the past week and prices caught up with declines in its dollar notes. Offshore bonds climbed Friday after Bloomberg News reported that China’s top regulator signed off on a proposal for Evergrande to renegotiate payment deadlines with banks and other creditors.