HALISTER1: Fidelity Likes China Internet Bonds Despite ‘Regulatory’ Risk

Fidelity Likes China Internet Bonds Despite ‘Regulatory’ Risk

(Bloomberg) -- Eric Wong, a Hong Kong-based portfolio manager at Fidelity International, likes bonds from China’s e-commerce companies as they have strong credit metrics and are generating a lot of cash.
  • “Obviously a risk for these names is sometimes headline or regulatory risk”: Wong
  • NOTE: Alibaba said on May 25 that it is being investigated by the U.S. Securities and Exchange Commission over its accounting practices. NSN O7RHL66TTDS7
  • Wong said that the credit metrics of China online technology companies are so strong that even though most of their revenues are in yuan, a depreciation in the yuan doesn’t affect them that much
  • “Theoretically, if the renminbi depreciates it will worsen their ability to support those dollar bond payments, realistically it’s not that big a deal”: Wong
  • NOTE: Alibaba’s 2.5 percent bonds due 2019 have risen 0.3 cent on the dollar to 100.7 cents since May 25. Its 3.6 percent bonds due 2024 have increased 0.5 cent to 100.9 cents
  • NOTE: Chinese internet companies Baidu and Tencent also have U.S. dollar bonds outstanding.
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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