China Debt Markets Signal Optimism on Housing Stimulus Boon

Credit markets are signaling optimism about China’s latest stimulus steps aimed at easing the property-market crisis, alleviating some of the earlier skepticism seen over the impact of efforts to shore up the sector.

China’s junk dollar bonds, dominated by property developers’ notes, saw their biggest daily gain in almost a month on Tuesday, according to an index compiled by Bloomberg. The rise followed a move by Chinese lenders to cut the five-year loan prime rate by a record 25 basis points to 3.95%.

Reducing the loan prime rate will allow more cities in the world’s second-biggest economy to cut minimum ...