The Asian junk bond market suffered from another wave of sales on Thursday, pushing the prices of many Chinese developer bonds even higher.

The price of US dollar bonds in many Chinese real estate companies has fallen by around 5 points, according to some market participants. Some fell further as numerous defaults and fears of a further fall in prices led many investors to sell their holdings.

Among the worst hits were the bonds of Kaisa Group Holdings. Ltd.

1638 -7.54%

, a real estate developer who had already defaulted on its external debt in 2015. Shares of the Hong Kong-listed company fell 7.5% on Thursday, despite a widespread rally in the city’s stock market.

The 9.375% coupon Kaisa bond, which matures in 2024, was listed at just 55 cents in dollars on Thursday afternoon in Asia, dropping around 20 points this week.

7.95% bonds of Sunac China Holdings Ltd.

1918 2.14%

Another developer investor was concerned recently, but after a recent sharp drop, it was offered at 72.5 cents in dollars on Thursday.

Asian junk bond investors were shocked earlier this week by an unexpected dollar bond default from Fantasia Holdings Group Ltd.

1777 1.82%

A high-end developer who had previously shown he would pay off his $ 206 million overdue debt on October 4.

Several developers’ September sales also fell sharply from August as demand from Chinese buyers declined.

“Monday’s fantasia default has exacerbated feelings of risk aversion,” said Cheong Yin Chin, senior analyst for a Chinese company at debt research firm CreditSights.,

EGRNF 0.03%

Weeks of silence on this issue also contributed to investor pessimism.

Chung said sales could continue and the extreme market reactions were “investor fears of not knowing how China will deal with Evergrande and an increase in the number of developers who may default.” Are mixed. “

On Wednesday a day ago, the ICE BofA index on Chinese high yield dollar bonds returned more than 18%. It has been the best for almost 10 years.

Some market participants have said that as mainland China is in the middle of a holiday week from October 1, bond prices have fallen sharply due to low trading volumes.

Andrew Dewar, investment manager specializing in Asian credit at GAM Investments, said:

“Brokers try to find a bottom by lowering prices until someone gets a snack,” he added.

Uday Patnaik, head of emerging market bonds at Legal & General Investment Management, said he has sold almost all of the high-yield Chinese real estate bonds in his company’s absolute return fund.

“I don’t think the Chinese are dealing with this situation right now,” he said. “It started with a still big problem that wasn’t properly circumscribed, and now it’s an industry-wide problem,” he added.

Patnaik said the distress in the real estate sector will continue to affect consumer confidence in China and other parts of the economy unless Beijing steps in to stop the decline.

Write to Serena Ng ([email protected]) and Anna Hirtenstein ([email protected])

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Chinese real estate bonds fall again

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