China Evergrande’s failure to meet bond coupon payments is creating a “perfect storm’’ in the nation’s high-yield bond market that’s left it broken and devoid of trust.
That’s according to Monica Hsiao, founder and CIO at asset manager Triada Capital in Hong Kong, who said the market is now driven by emotions as some investors, struggling to separate fact from fiction as rumours fly, just ”throw everything out the window.”
“We’re in a vortex of fear,’’ she said. “We’re really going through the eye of the storm. We’re at a point now where just any little rumour or talk or speculation, whether true or not true, will cause bonds to move 10 points.’’
Bondholders said Evergrande hadn’t stumped up $150 million for a coupon payment due Monday, its third missed payment in as many weeks, while developers Modern Land and Sinic are among others scrambling to defer payments. The high-yield China bond market plunged as fear over contagion in the $5 trillion sector spooks investors.
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By Kevin Hamlin
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