Investors bullish on junk bonds as Beijing clamps down on defaults

Shanghai

CHINA has stanched a string of defaults and further speculation that authorities will continue to stave off failures is leaving investors the most bullish on local junk bonds in five years, despite record maturities.

Only two notes have suffered nonpayment this quarter. That's down from 10 in the second quarter and 7 in the first three months of the year. The average yield premium for five- year corporate securities with AA- ratings, considered speculative in the nation, over the sovereign narrowed 85 basis points to a five-year low of 262. The country's state-owned assets regulator pledged last month to prevent bond delinquencies by central government-owned firms.