China’s decision to forgo a rating for its upcoming dollar bonds isn’t fazing a top-performing money manager, who sees the securities as safe as counterparts from Germany.
For one thing, the country has lower public debt burdens than many other major economies, Andy Seaman, chief investment officer at London-based Stratton Street Capital LLP points out. China’s government debt-to-GDP ratio was 44 percent last year, less than half the U.S. and U.K. more than one-third below emerging-market peer India, International Monetary Fund estimates show.
Seaman’s team has a model that gives China a 5-star rating on a 7-star scale, the same as Germany’s and better than 3-star U.S. and U.K. His Renminbi Bond Fund has returned 15.3 percent this year, beating 98 percent of its peers.
“The lack of rating wouldn’t put us off buying the U.S. dollar bonds per se,” Seaman said ahead of the China sovereign sale expected to price on Thursday. “That decision would depend on the attractiveness of the spreads.”