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China Bond Market Meltdown Brings World of Hidden Bills to Light

  • Developers have issued wealth products, private bonds
  • Refinancing difficulties make it harder for firms to pay debt
China Evergrande Group Development in Nanjing
Photographer: Qilai Shen/Bloomberg

China’s property developers are struggling to pay bills that many of their bond investors didn’t know were there in the first place.

Missed payments on off-balance sheet IOUs such as high-yield consumer products, secretive loans and private bond guarantees have rocked China’s credit market in recent weeks. Dollar bondholders are struggling to know their place in the repayment queue in the event of a default, forcing a dramatic repricing of risk that’s all but frozen the primary market for developers.