Secret China Distressed-Debt Deals Start Unfreezing Trading

After record defaults on China’s bonds, there’s now record interest in trading the country’s distressed debt, Bloomberg News reported. An arm of the central bank that runs the biggest bond-trading platform last month conducted the third auction of distressed securities since July. This one had the biggest participation yet, spanning 43 institutions. While prices of the trades were published by the China Foreign Exchange Trade System, the counterparties’ names were kept secret to maximize deals. The auctions, which CFETS aims to encourage foreign investors to join in future, are part of China’s broader initiative to introduce more dynamism into the world’s third-largest bond market, at about $13 trillion. Greater clarity on the pricing of distressed securities may boost trading more generally, and improve transparency -- the anonymity of participants notwithstanding -- in what has been an opaque debt industry. Read more

Location