Asia’s junk bond returns are lagging behind investment-grade debt like never before as China’s weakest projected growth since 1990 and escalating leverage expose cracks across the region’s economies.
Speculative-grade notes denominated in dollars have gained 2.76 percent this year through May 9, 1.95 percentage points less than high-grade bonds, according to index data compiled by JPMorgan Chase & Co. The underperformance is the worst over the same period since at least 2005. Globally, returns were about even at 4.1 percent, Bloomberg indexes show.
Borrowers from Asia outside Japan issued $36.3 billion of U.S. dollar notes in April, exceeding January 2013 as the busiest month on record by 60 percent, Bloomberg data show.
China Petrochemical Corp., known as Sinopec Group, raised $5 billion in the region’s biggest dollar-bond offering in a decade, while Cnooc Ltd., China’s biggest offshore energy explorer, issued $4 billion of debt. Both are investment grade.