Connecting Regions of Asia.

China’s Usual Credit Defaults


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.

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