China's new Silk Road runs straight through junk territory

Beijing

CHINESE President Xi Jinping's new Silk Road to Europe traverses territory where most bond investors fear to tread.

Of the 68 nations China lists as partners in its Belt and Road Initiative, the sovereign debt of 27 are rated as junk, or below investment grade, by the top three international rating firms. Another14, including Afghanistan, Iran and Syria, are either not rated or have withdrawn their requests for ratings.

President Xi's vision, first proposed in 2013 and this week elevated to an official policy enshrined in the Communist Party's constitution, involves spending as much as US$1.2 trillion on railways, roads, ports and power grids over the next decade, according to Morgan Stanley. The intent is to open new business opportunities for domestic companies and extend China's reach - even though the route cuts through …