Don't Buy Says First State Cinda as Yuan Bond Yields Slide
- Yield premium on China corporate bonds dives to six-year low
- People don't understand risk well enough sometimes, Fitch says
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Chinese companies’ yuan notes are starting to look too expensive. That’s the assessment from money manager First State Cinda Fund Management Co., who says credit spreads aren’t sufficient to cover risks.
Yields on the nation’s onshore corporate bonds plunged to a five-year low of 4.67 percent Wednesday, a Bank of America Merrill Lynch index shows. The extra spread investors demand to hold top-rated debentures over similar maturity Chinese government securities dropped to 83.6 basis points on Sept. 7, the least since August 2009.