FX.co ★ Large investors snapping up China’s junk bonds

According to CNBC, the leading US TV channel, global investors are rushing to buy up junk bonds in Asia. Those offered by Chinese property developers are enjoying buoyant demand.

Experts are mulling over a sudden surge in the appetite for risk. Last year, such debt securities known as high-yield or junk bonds lost favor with investors. Indeed, investors shifted focus away from riskier assets due to an escalation of the trade conflict between the US and China. However, most investors share the viewpoint that such global headwinds are waning, thus improving business climate. So, market participants are poised for risky bets amid the current market conditions in Asia.

Hayden Briscoe, a strategist at UBS Asset Management, confirms robust demand for high-yield bonds this year, in particular those issued by China’s real estate developers. The same trend was discovered by Neeraj Seth, an expert at BlackRock. The research of CreditSights reads that China’s property developers issued the bulk of junk bonds traded in the US dollars in the first three months of 2019. Asia released dollar-denominated high-yield bonds worth almost $20 billion in Q1 this year that was a twice bigger amount than in Q1 last year. In March, People’s Bank of China Deputy Governor Pan Gongsheng stated that China was taking measures to invite foreign investors to the domestic debt market. So, China’s authorities aim to create efficient market conditions.