Asian junk bonds are risky, yes, particularly those issued by Chinese property firms. But they continue to churn out returns even if stocks have tanked.
Yield-hungry Asian investors loaded up on junk but high-yielding bonds in the region, including Chinese property debts, according to The Wall Street Journal (paywall).
Purchases of high-yield debts hit almost $17 billion in the past three years, more than double from the previous three years, it said.
The demand from wealthy Asian investors, who coursed their bond buying via private banks, fueled a rise in the issuance of high-yield debts, which soared since 2013, the report said.
There’s a reason why rich Asians preferred to buy bonds. The WSJ said even if the Shanghai Composite Index plunged 20% recently from its June 12 peak, high-yielding Asian bonds were up 0.7% from June 12 to June 30.
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