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Beware the rally in high-yield ‘dim sum’ bonds

07 August 2012

In recent months, high-yield corporates in the offshore renminbi (CNH) bond market have rallied exceptionally in the wake of improving sentiment towards mainland property developers and a shortage of supply in the high-yield space. However, we do not believe that this latest rally is a sign that investors should buy aggressively. Not only is the potential for further gains likely to be capped, but the universe for high-yield CNH bonds remains highly illiquid.

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