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Buying Developers’ Junk Bonds Is a Consensus View: China Today

Nov. 23, 2021, 9:55 PM

Comparing China’s issues with troubled property-developers to the Lehman Brothers meltdown is always off the mark, because the housing slowdown is a deliberate policy move. Now that Beijing is showing signs of relaxing its squeeze, investors from T.Rowe Price to Goldman Sachs have found the almost 20% yields provided by developers’ high-yield bonds enticing. UBS now has going long Asian junk bonds, a group dominated by Chinese developers, as its top trade in the credit market for 2022. The caveat is that with a flood of debt coming due, credit selection remains the key to avoiding potential land mines.

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