UBS Trader Makes $30 Million From Trading Chinese Junk Bonds


Junk bonds are being seen as a lucrative trade endeavor despite tighter regulation since the 2008 financial crisis.

Kelvin Zhao is making large profits for UBS through trading Chinese junk bonds.

Zhao has quickly become one of the largest traders of Chinese junk bonds. These junk bonds are specifically dollar bonds that are attached to Chinese borrowers with poor credit or even no credit ratings.

The amount of Chinese junk bonds on the market has recently increased at large rates. At the end of 2014 there were $8.7 billion worth of Chinese junk bonds. Today there are not close to $229 billion worth of Chinese junk bonds being traded.

The success is unprecedented, especially given the tighter regulation that has resulted from the 2008 financial crash. Traders will often see between $8 and $10 million worth of profits in a year as very good, with a $20 million or more year in profits from Chinese junk bonds being extremely rare. Zhao has made UBS over $30 million from his trading of the junk bonds.

UBS currently has five traders dedicated towards trading this specific type of junk bond. The five traders are split between two offices in Hong Kong and New York. Comparably, Citigroup has eight traders allocated to this particular type of trading.

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Economics, Finance and Investing