Chinese debt almost as safe as Treasuries

Chinese sovereign bonds are becoming almost as safe as US treasuries in the CDS market.

Five-year credit-default swaps contracts on Chinese bonds have fallen 29% in the past month to 56bp, the biggest drop in the G20. CDS for equivalent US treasuries were little changed at 46bp, according to data compiled by CMA and Bloomberg. In August, China's bonds became cheaper to insure than those of top rated nations the UK and France. Moody's Investors Service said last week it may raise China's debt rating from A1, five levels below the top Aaa grade. The 10bp difference between contracts on China and the US is the narrowest since at least January 2008. China's economy ...