A Stock Picker's Tale of Greed Hits the Bond Market
Equity investors have kept some high-flying companies alive. But a slew of Chinese corporate accounting scandals will hurt debtholders, too.
Coffee isn’t the only thing getting burnt.
Photographer: Qilai Shen/BloombergAll of a sudden, bond traders are crossing paths with short sellers, and things are getting messy.
Bringing them together is a growing list of Chinese corporate accounting scandals. Last week, Luckin Coffee Inc., a target of short seller Muddy Waters Research, admitted its chief operating officer may have fabricated billions of yuan in sales. Days later, TAL Education Group said an internal audit found an employee wrongly inflated revenue. Muddy Waters also said it's shorting shares of iQiyi Inc., tweeting that it believes the Netflix-like streaming service is a “fraud.” The company, backed by Baidu Inc., said the report contains “numerous errors.”