Evergrande charges Asian junk bonds

Evergrande in Shenzhen

Dollar bonds are being sucked into the problems of the Chinese group.

(Photo: imago images / ZUMA Press)

Frankfurt How great is the risk of infection from Evergrande? This is a question that fund managers are often asked by their investors these days. The answers are mostly reassuring: The serious imbalance of the largest Chinese real estate developer is affecting sentiment in the broader markets, but is not pulling it down significantly.

But there is one exception: dollar bonds not only from Chinese, but also from Asian companies in general with poor credit ratings have come under massive pressure. The courses have fallen significantly. Conversely, the average yield on these bonds soared to almost twelve percent. The return was last so high in May 2020.

The yields on dollar bonds from weak Asian borrowers have been rising significantly since the beginning of the summer. The delta variant of the corona virus and the slowly foreseeable end of the ultra-loose monetary policy in the USA has been bothering the bonds for a long time.

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