Independent China Bond Ratings Appear To Be A Myth

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Mark Melin
Published on
Updated on

As obvious credit events occur with little adjustment in “official” China bond ratings, will a system crash occur due to a transparency issue again? It can be amusing watching a communist nation dive into the world of free market capitalism and make traditionally communistic mistakes. A component of free market economic systems is that information is known to all parties, which provides a trading venue legitimacy to engage in price discovery. Taking a closer look at China’s “AAA” rated bonds – of which Bloomberg says 57% look like junk – and it shows how China has a long way to…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.