China bond buyers tiptoe through credit analysis minefield

State backing for domestic companies is hard to gauge, as new investors are discovering

Bond trap
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Buyers of Chinese corporate bonds must deploy the usual tools of credit analysis: earnings ratios, debt levels, cashflow, and more. But there is a powerful factor that can outweigh all others: state support.

Putting a value on state support is a thorny business, and experts believe China’s burgeoning bond market is littered with mispriced credits ready to trap the unwary investor.

“The problem in the Chinese credit market is that there are a lot of different bonds out there that are all

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