According to media reports on Nov 2nd, several bond defaults in Chinese real estate have caused significant losses for foreign investors. Investors have lost confidence in some bonds as they have priced them up to 10% below their par value.
The latest market twist comes just days after a mid-sized developer, CIFI Holdings Group Co, said on Nov. 1 that after failing to reach an agreement with creditors, the group suspended all payments of principal and interest payable under its offshore financing arrangements and ended related discussions with individual creditors or groups of creditors outside the country. Several bonds issued by Beyoncé Holdings Ltd. have been quoted at 8% below face value on Nov. 1st. Some managers of investment funds said that although the dollar bonds of CCP real estate companies are cheap, there is very little incentive for people to invest. Investors in communist China real estate bonds have reportedly lost billions of dollars this year. Fidelity International’s Asian high-yield bond fund had a negative 43% total return through the end of October. A similar fund managed by BlackRock had a negative 34% total return for the same period.
According to analysts and investors, global investors are adopting a sell-first and think-later strategy when it comes to high-yield developers amid the market technical and fears among investors are driving the downturn in the Communist China’s real estate market.