1.Chinese government has succeeded in getting funding to higher risk sectors by relaxing bond approvals.
2. Regulators began allowing unlisted companies to issue bonds on public exchanges.
3. Chinese bonds' higher yields are appealing given the lack of options in Europe or other developed bond markets.
4. Over 40% of the bonds outstanding mature in less than three years. This is in contrast to elsewhere in the world.
Source: wjs.com
LOCAL SPECULATION & SHADOW BANKING
1. "Foreigners own less than 3% of Chinese bonds." Source: www.wsj.com
2. Wealth managers are now turning bonds into leveraged high-yielding products for desperate investors after a real-estate slump and summer stock-market crash.
3. The proceeds from bond sales are invested in real estate or constructions.
4.high-risk borrowers who took loans from wealth-management products (WMPs) are moving into bond markets.
5. The bond market remains much less developed as a long-term financing tool.
5. Demand in China is largely driven by liquidity conditions and speculation that government will provide support when necessary.
Source: www.ft.com
