Chinese Developers Plan Bonds Protected by Derivatives in Crunch
- Such deals first emerged in May following regulatory support
- Investors can buy derivatives to protect against bond default
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Two Chinese private developers are planning bond deals that come with derivative protection, in the latest sign of regulatory support to help ease select builders’ liquidity crunch.
Country Garden Holdings Co. and Midea Real Estate Holding Ltd. are planning new debt deals with separate issuance of derivatives that allow investors to buy partial or full protection against default. That may encourage investors to put their money in those notes due to the reduced risk that they won’t get their money back in an emergency.