Connecting Regions of Asia.

China’s Usual Credit Defaults

20

Beijing is allowing a wave of defaults by state-linked companies in the country’s $15 trillion credit market. 
Last week, prominent chipmaker Tsinghua Unigroup Co. defaulted on $450 million of dollar debt triggering cross-defaults on $2 billion more — equivalent to almost two-thirds of the total defaulted debt in China’s offshore bond market in 2019. While this may be bad news for the weakest state-owned enterprises, it’s an improvement for investors, the credit market and China overall. 
A more accurate pricing of risk gives buyers of bonds greater transparency in a relatively opaque economy.
 That would boost the allure of Chinese debt, drawing more inflows, which in turn would help reduce the reliance of the nation’s capital markets on the government.

Get real time updates directly on you device, subscribe now.

Leave A Reply

Your email address will not be published.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More