China Junk Bond Prices Hit Record Low Amid Real Estate Market Crisis

[Asia Economy Reporter Noh Kyung-jo] In the real estate market crisis, the prices of Chinese speculative-grade bonds (junk bonds) have fallen to an all-time low.

According to Bloomberg on the 18th (local time), the average price per dollar of speculative-grade corporate bonds issued by Chinese real estate companies dropped another 1 to 2 cents from the previous day's record low of 55.7 cents.

Two years ago, the Chinese government implemented stringent real estate regulations to curb soaring housing prices, causing local real estate companies to face liquidity crises. Major real estate firms such as Hengda (恒大, Evergrande), Zajiaoye, Huayangnian (花樣年, Fantasia), Xinli (新力, Sinic), and Dangdaizhiye (當代置業, MOMA) have consecutively encountered default situations.

The Chinese authorities, sensing the crisis, eased loan restrictions on some real estate companies and relaxed mortgage loan regulations for buyers. However, housing prices in China continue to decline, and the default risk for real estate companies remains high.

Junk bonds are high-risk, high-yield corporate bonds issued by companies with low credit ratings and have been a major funding source for Chinese real estate developers. Currently, the price of Chinese junk bonds has plummeted more than 55% from last year's peak, reflecting the real estate crisis.

Previously, the authorities instructed banks to provide at least 600 billion yuan (approximately 119 trillion won) in funding to the real estate sector over the remaining four months of this year.

This content was produced with the assistance of AI translation services.