Published On: September 14th, 2021Categories:

We first issued a note mid-April when mounting concerns about the financial health of one of the Chinese big four AMCs – China Huarong – fueled a significant sell-off on the issuer’s bonds, with the risk of more market contagion in the world’s second largest credit market. We acknowledged its deteriorating credit profile, but due to its systemic position, we recommended not to give in to the panic and to reduce exposures on strength. While patience is the mother of virtue, what should investors do now? We are comfortable with short-dated issues, including the perpetual callable in 2022. We are more cautious on long dated bonds, with more modest returns going forward. 

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