Fears over China Evergrande sent tremors across global markets on Monday as equity indices trended lower and CDS spreads widened. Beginning in Asia, while Shanghai was closed due to a holiday, Hong Kong’s HSI index ended 3.3% in the red with the impact spreading over to the western equity markets too and CDS markets across. Within the bond markets, the iBoxx USD China Real Estate High Yield (HY) Index dropped 1.5%, dragging the iBoxx USD China HY Index down 0.9% and the overall Bloomberg USD Asia HY Index down 0.8%. Investment Grade (IG) names from the Chinese real estate space were not spared either with the iBoxx USD China Real Estate IG Index also ending 1.5% lower as contagion risks hit the sector.
Whilst single-B names like Fantasia, Yuzhou, Yango fell 3-4% yesterday, double-B such as Sunac, Kaisa, Powerlong, and IG names like Country Garden also saw their bonds fall over 2 points.
