Pimco senses panic as China's 8t yuan bond leverage unwinds
Shanghai
CHINA'S bond traders are getting a painful lesson on the dangers of leverage. After years of racking up profits by borrowing cheaply and ploughing the proceeds into higher-yielding debt, investors are now rushing to unwind those wagers amid the deepest sell-off in 13 months.
The bets are getting squeezed from both sides as bond prices sink and borrowing costs rise to one-year highs in the eight trillion yuan (S$1.66 trillion) market for repurchase agreements, used by traders to amplify their buying power.
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