, Columnist
Google 'Minsky Moment' Before Buying These Bonds
Ever more obscure Chinese cities are selling debt as investors clamor for their generous yields. Tread carefully.
Name that city (it’s Yichang).
Photographer: STR/AFP/Getty Images
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In just a few months, a shunned corner of China’s $13 trillion bond market has become an investor favorite. Thank the trade war.
Local government financing vehicles have long been seen as the potential trigger for a Minsky moment, a sudden crisis that follows a buildup of debt. As recently as October, there was little appetite for their bonds in the offshore dollar market. These days, millions are being raised by first-time issuers from cities so obscure that most people would need Google to find out where they are.