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.