China Junk Dollar Bonds Drop After Release of Weak Economic Data

Published 16 May 2023, 04:13:43.976 GMT

(Bloomberg) -- Chinese high-yield dollar bonds fell after a slew of weak data deepened concerns about the country’s economic outlook. 

* The notes dropped at least one cent Tuesday morning, according to traders

* Guangzhou R&F’s 7.5% dollar bond due 2025 fell 3.8 cents at 12 cents on the dollar as of 12:01pm in Hong Kong, poised for a record drop since the note was issued in July 2022

* Road King’s 5.9% dollar note due 2025 dropped 2.5 cents to 63 cents, set for a seventh-straight decline

* “The latest round of weaker economic data might put negative sentiment on China property bond market,” said Daniel Fan, credit analyst at Bloomberg Intelligence. “The record high unemployment among young people at 20.4% might raise concern over sustainable housing demand”

* “Concern over the pace of economic recovery and the level of homebuyer confidence, against a backdrop of increasing poor market technicals, is driving real money investors to reduce exposure to the sector,” said Charles Macgregor, head of Asia for Lucror Analytics

** Investors may not necessarily differentiate between individual developers based on fundamentals

By Lorretta Chen

--With assistance from Alice Huang and Dorothy Ma