China’s Local Credit Market Is Rare Bright Spot for New Leaders

(Bloomberg) — China’s new leadership lineup faces a challenging economic outlook and dwindling investor confidence across markets, but there’s one asset class where things are much smoother — local corporate bonds near their strongest-ever levels.

Boosted by a slew of easing measures to support a slowing economy, some key onshore credit yields have been at their closest levels to comparable government debt in about 15 years. The spread for five-year AA rated yuan notes was 106 basis points Friday, the smallest since 2007 according to data compiled by Bloomberg. The premiums are about 0.5 basis point wider than their recent similar lows for benchmark three- and five-year AAA rated bonds.