Debt Supply Risk Looms for China Bonds on Fiscal Stimulus Plan

Bloomberg News

Debt Supply Risk Looms for China Bonds on Fiscal Stimulus Plan
Debt IssuanceSovereign DebtChina
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(Bloomberg) -- A flurry of news on China’s use of special sovereign debt to fund fresh stimulus highlights a growing risk to its record bond rally — a surge ...

-- A flurry of news on China ’s use of special sovereign debt to fund fresh stimulus highlights a growing risk to its record bond rally — a surge in new supply.Officials have issued some 752 billion yuan of the securities so far this year out of a planned 1 trillion yuan by November, according to calculations by Bloomberg . Now they are said to be mulling an additional 1 trillion yuan of capital injection into banks, mainly using special bonds, Bloomberg reported on Thursday.

While any decisions remain to be confirmed and details finalized, the reported debt issuance would bring significant upside to sovereign debt supply. Liu expects China’s yield curve to continue to steepen with supply as one reason and the stronger-than-expected stimulus plan another.'Big Short' investor Michael Burry bet half of his portfolio on Chinese stocks. It's finally starting to pay off.

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