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Amid China’s default drama, dollar bond buyers upbeat

As investors quake over the seismic default drama surrounding China Evergrande Group, it seems that one vital crowd hasn’t gotten the memo: buyers of Mainland dollar bonds.

Demand for Chinese dollar notes staged a comeback in August even as China Evergrande concerns wreaked havoc on the broader credit markets in Asia’s biggest economy particularly the junk-bond arena. Average monthly yields recently hit their highest in at least eight years.

Yet in August, Chinese offerings saw orders nearly eight times their issuance size. That is roughly double the oversubscription ratio in July.

On one level, there’s a certain logic to bidding on debt sold by mainland borrowers that can still operate in offshore debt circles even amid contagion risks. On the other, it could be a rare bit of good news for a Beijing which is spooking investors left, right and center.