"The market may see this as a signal that the SOE deleveraging and reform will accelerate as the economy recovers from the pandemic. "In our view, 's missed payment surprised the market because it indicated the local government's attitude to provide support had reversed within just one month," said Li. Those actions together had been taken as "signs of government support," according to S&P. The country will also deepen reforms related to debt issuance and open. Additionally, it had just issued a 1 billion yuan medium-term note in October. In a brief statement on Saturday, China’s securities regulator vowed to prevent and resolve default risks in the bond market. Just a month before it defaulted, the ratings firm said Yongcheng was believed to be swapping loss-making chemical businesses for profitable coal businesses. While credit bond defaults have started in China in recent years. S&P pointed to the "seemingly abrupt removal of government support" in the case of the coal miner. Pricing Credit Default Risk Correctly and Improving Creditor Protection A mature. Together, that puts 50 billion yuan ($7.6 billion) at risk of default, according to the ratings firm. It could lead to a cross default by its parent company Henan Energy and Chemical Industry, one of the largest state-owned firms in Henan province, it said. S&P flagged the example of state-owned miner Yongcheng Coal and Electricity - which missed its bond payment that was due on Nov. Chinese P2P lending platforms have an astonishing default rate of 87.2 based on data available in 2019, which indicates the seriousness of the problem this. We expect access to debt capital markets to remain curtailed for most privately owned developers in the first half of 2022, with refinancing activity significantly limited until investor confidence improves.
and The Economist forecasts a wave of defaults on these loans. Late last December, the case of a dollar-bond default by commodity trader Tewoo Group was the first in two decades. These pushed the offshore Chinese corporate default rate up to 2.8 of issuers in 2021, compared with 2.5 in 2020. The Belt and Road Initiative (BRI, or B&R), formerly known as One Belt One Road (Chinese. The first-time default rate for SOEs are well below 1% currently, as compared to the 9% default rate by private enterprises, according to ANZ's data.ĭefaults by government-supported firms in China were rare before recent times. "The default triggered investor concerns about the entire corporate bond market, because it breaks the long-held assumption about an implicit government guarantee for SOE bonds," ANZ Research's China Markets Economist Zhaopeng Xing wrote in a note on Friday. Last month, one of China's largest property developers China Evergrande also came under the spotlight for reportedly having cash crunch issues.
Other high-profile debt defaults followed suit this week, including government-backed chipmaker Tsinghua Unigroup, which missed payment after failing to extend its deadline for repayment, and another default by state-owned Huachen Automotive Group - a Chinese joint venture partner of BMW.
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