Stress in China’s $740 billion offshore credit market has eased to the least in almost two years, following a rally in developers’ bonds as authorities intensify a campaign to alleviate an unprecedented property crisis.
A Bloomberg index of Chinese junk dollar bonds, which are dominated by real estate firms, has surged nearly 60% from a record low in November to 77 cents on the dollar this week. It’s also at the highest in more than a year.
That helped bring the market’s stress gauge in December to level 3, down from 4 in November and marking a level last seen for Bloomberg’s China credit tracker in May 2021, when compilation of the data began. The tracker indicates rising levels of stress via a band of 1 to 6.
Policy makers have introduced a barrage of measures since November to arrest a housing slump and ease debt risks at developers, with outgoing Vice Premier Liu He describing the sector as a “pillar” of the world’s…