JPMorgan has proposed an alternative to its popular index of Asian corporate bonds that slashes the weighting of Chinese issuers, following a financial crisis in the country’s real estate market that has choked off new issuance from the highly indebted sector, reports the Financial Times.
The new version of the JPMorgan Asia Credit index (JACI) would seek to compensate for a lack of new dollar bond sales by Chinese property groups—almost all of which have been frozen out of international markets for more than a year—by adding corporate debt from other Asia-Pacific countries, according to a person with direct knowledge of the matter.
Those additions would take China’s weighting in the new index to roughly 30%, the person said, compared with about 43% in the existing benchmark, which is followed by fund managers with more than $85 billion in assets under management. The alternative index would expand to include Japanese and Australian issuers, weighted at about 20 and 10% respectively.