The Securities Litigation Expert Blog

The Yield Bubble - China Edition

Posted by Jack Duval

Mar 29, 2013 4:05:53 AM

Yields on Chinese junk bonds have fallen by 30-40 percent over the past two years, as the hunt for yield goes global.  (NYT)  If "Chinese High Yield Debt" doesn't put the fear of God in you, read this:

Chinese junk bonds also have a unique structure, which could leave investors vulnerable.  Mainland China’s domestic bond market remains largely off limits to foreign buyers. So most investors buy offshore Chinese bonds, which are issued through holding companies headquartered in places like the Cayman Islands.  The bonds tend not to be backed by the actual businesses and underlying assets in mainland China. That means foreign bondholders may have little legal recourse if a company defaults on its debt, especially if local banks or other Chinese creditors make claims.

Investment advisors should be checking any high yield funds they have for China exposure, as this will surely end badly.
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Topics: investments, high yield, yield bubble, fixed income, China, debt

Rising Class Actions Against Chinese Companies

Posted by Jack Duval

Nov 7, 2012 1:04:09 AM

The International Comparative Legal Guide recently released a study by NERA on international class actions.  The bottom line: despite the Morrison decision, international class action suits are on the rise - primarily because of China.  (ICLG)

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Topics: class actions, Morrison, NERA, litigation, ICLG, China

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