An investor holds watches a board showing stock prices (red for gains). Photo: Reuters

China’s deleveraging campaign may actually be good for the country’s bonds, Bloomberg reports, citing analysis from Fidelity International.

The crackdown on debt will cause a slowdown in economic growth, prompting the People’s Bank of China to adopt a neutral-to-easing bias, according to fixed income portfolio manager Bryan Collings. Currently, policy makers adhere to a “prudent and neutral policy.”

“I would expect to see a continuation of the current momentum to manage overall financial and corporate leverage,” Collins said. “Such measures could help reduce government bond yields and help support credit spreads, both onshore and offshore.”

China’s bonds slumped on Wednesday, with the 10-year yield rising four basis points to 3.76%, the highest since April 2015 on a closing basis.

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