4 ms·
They already announced they aren't making their next interest payment, so the value of the "9.5%" coupon is almost certainly less than that.
by ac29 5y ago
They already announced they aren't making their next interest payment, so the value of the "9.5%" coupon is almost certainly less than that.
- blitzar 5y agoThe value of the coupon is still the same, the implied yield on the bonds is now >30% as defaults are now priced in. Just hitting the wires China Evergrande main unit Hengda Real Estate will make coupon payments for onshore bonds due tomorrow - so those buyers at 30c of the bonds get an interest payment of 5c a few days later (and the bonds are probably worth more than 30c now). Median recovery rates on defaulted bonds are around 25%, so you could probably buy these bonds on the belief they are going to default and make money. Irrespective these funds are basically indexers - people want exposure to a diversified portfolio of High Yeild Asian bonds, inevitably you will have some shit in there that goes south.