Huawei's scrapped bond ushers in new era of uncertainty

The Chinese company's travails demonstrate that bond investors need to start paying far greater attention to geopolitical risk when they assess individual borrowers.

Huawei’s decision to cancel both a US dollar and euro-denominated bond marks a new chapter for Asian bond markets, as geopolitical tensions rise to the top of a deal’s potential credit risks.

For the past few years, the biggest unknown for investors buying Chinese G3 currency bond issues has been key man risk the almost impossible task of working out, which tycoon will disappear next as a result of the government’s anti-corruption drive. 

But escalating trade tensions between China and the US have added a new dimension to credit evaluation, with Huawei becoming the Asian bond market’s first victim.

This happened on Wednesday...

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