China Credit Investors Face Billions in Losses, Waning Power (2)

Investors in China’s $870 billion of offshore bonds are facing up to the realities of being last in line as borrowers struggle to pay during an unprecedented wave of distress that’s sent defaults to a record.

Already behind their onshore peers in the pecking order, hurdles faced by dollar-note holders in their efforts to claw back money are growing. They include backroom deals that give priority to undisclosed private lenders, unfavorable extensions and payment delays -- all underscoring poor governance at debtors and the diminished power of creditors.

The new reality comes in the wake of China’s property-market collapse, a ...