Chinese Convertible Bonds Rocked by Once-Unthinkable Defaults
- Onshore convertible debt sales at their lowest since 2016
- Market faces more refinancing pressure in the next few years
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Jimmy Yang believed he was making a boring but safe investment when he bought convertible bonds of China Grand Automotive Services Group Co. in May. The country’s 801 billion yuan ($119 billion) convertible debt market was long an oasis of small but sound returns, providing shelter even during last year’s brutal market downturn.
But by mid-July, the 38-year-old lost half of his 1 million yuan investment as tighter capital market rules led to panic selling in small-cap stocks and their related bonds, including Grand Auto’s.