A string of stresses at indebted property developer China Evergrande has left a mark on investor confidence for the country’s riskiest borrowers in the international bond markets.
Interest rates on Chinese high-yield bonds issued offshore were 13.3 per cent last week, according to an index from ICE and Bank of America, up from less than 10 per cent in June and close to levels when the onset of the coronavirus pandemic dragged down bond prices at the start of 2020. The recent peak in late July was more than 14 per cent.
The higher yields indicate that Evergrande’s woes have sparked broader concerns about the health of the property sector, which is responsible for about half of China’s offshore bond issuance but is under pressure from Beijing to reduce leverage.