Ratings agencies downgrade China Evergrande as concerns over junk bonds

[vc_row][vc_column][vc_video link="https://www.youtube.com/watch?v=ZiLVNqac2tA"][/vc_column][/vc_row][vc_row][vc_column][vc_column_text][/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]major credit ratings agencies this week downgraded china's most indebted property developer evergrand as concerns over asia's junk bond sector rise fitch ratings on wednesday downgraded china evergrand one notch from b to ccc saying that the negative developments surrounding evergrand may weaken investor confidence further pressuring its liquidity a rating of ccc means there's a real possibility of a default from the previous b rating which means there is material default risk but a limited margin of safety remains s p global ratings on monday took the property developer down two notches from b plus to b citing its inability to reduce debt in an orderly manner it added that the firm's credit rating was dragged down by what s p believed to be a severe decline in profitability at the firm china evergrande has been struggling with liquidity issues since last year however last week's news of an asset freeze refocused attention on the company's debt troubles that brought its share price down to a four-year low year-to-date evergrand share price has tumbled more than 60 percent while china's technology crackdown has triggered shockwaves through stock markets this week it's actually real estate that sparking concerns in asia's credit markets blackrock told cnbc on thursday tech is a smaller part of the credit markets in asia niraj seth head of asian credit at blackrock told cnbc's squawk box asia one of the key sectors that has gotten impacted in the credit markets is actually real estate asian bond markets have underperformed in the last few months compared to those markets in the u.s and europe he said in fact asian high-yield credit markets also known as junk bonds are in the middle of a correction seth pointed out china's property developers are among the biggest junk bond issuers in asia junk bonds are non-investment grade debt that carry a high default risk and therefore usually come with higher interest rates to compensate for that risk chinese authorities in recent months have attempted to cool the country's hot property market with new restrictions particularly lending to real estate businesses tencent and more investment firm names high quality chinese stocks trading at a discount arc invests kathy wood dumps more chinese stocks amid crackdown goldman sachs downgrades chinese education stocks on prediction market will shrink significantly i think interestingly we are in the middle of a correction seth said referring to asian high-yield bond markets so that obviously warrants some level of caution at this point we're in the summer months with lower liquidity so expect a bit more noise in front of us it's very unnerving when you are in the midst of a correction but if you are able to actually systematically look through the noise and pick the names you like have a diversified portfolio build resilience in the portfolio seth said<br><!-- wp:image {"id":1776,"sizeSlug":"large","linkDestination":"none"} -->rn<figure class="wp-block-image size-large"><img class="wp-image-1776" src="https://en.videoencontexto.com/wp-content/uploads/2021/10/Ratings_agencies_downgrade_China_Evergrande_as_concerns_over_junk_bonds_ZiLVNqac2tA.jpg" alt="Ratings agencies downgrade China Evergrande as concerns over junk bonds" /></figure>rn<!-- /wp:image -->[/vc_column_text][/vc_column][/vc_row]

Ratings agencies downgrade China Evergrande as concerns over junk bonds

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