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China Developer Debt Slump Is Engulfing Even High-Rated Issuers

  • Investment-grade bond spreads have jumped from 1.5-year low
  • Slumping home sales at major developers are adding to concerns

The worst selloff of China property developer debt in a decade has been spreading in recent weeks to investment-grade giants, injecting volatility into what had been some of the most staid investments in the industry.  

Spreads on high-grade Chinese dollar bonds have widened about 15 basis points from a 18-month low in September, according to a Bloomberg index. Yield premiums on a note from the nation’s biggest builder Country Garden Holdings blew out some 155 basis points Monday, the most in about a month. A security from Shimao Group Holdings Ltd. suffered a similar move.