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Since the beginning of this year, the domestic rating of Chinese corporate bonds has been downgraded by more than three times, highlighting Beijing’s efforts to reduce its risk in the US$1.7 billion credit market.
International rating agencies and fund managers have long criticized China Artificial height The company’s credit rating and low default rate indicate a lack of transparency and the assumption that the government will bail out companies in trouble.
According to information provider Wind, 366 bonds will be downgraded in the first four months of 2021, compared with 109 bonds in the same period last year.
When China’s Vice Premier Liu He issued a warning in November, the Chinese government’s “zero tolerance” for corporate malfeasance was zero. A set of default values State-owned company.
Analysts said that regulators have put pressure on debt underwriters, domestic rating agencies and auditors to encourage more timely disclosure of risks.
Among the hundreds of bonds that have been downgraded this year, there are bonds issued by HNA Group.HNA Group is a former acquisition group that has been dealing with debt and liquidity issues for the past five years, and Tsinghua University United GroupSince 2018, an important computer chip investor has faced doubts about bond repayments.
Charles Chang, head of Greater China at S&P Global Ratings in Hong Kong, said that Chinese companies’ poor disclosure of risks is “beginning to improve.”
“If the regulation is effective, you should see an increase in timely action, which is a sign of potential distress…. This does not mean that suffering has increased, but only that signs of suffering have increased .” Chang said.
Standard & Poor’s pointed out that in China, more than 80% of the local ratings of non-financial company issuers are rated A. Below this level, Chinese groups cannot issue publicly traded debt.
The five domestic rating and auditing companies contacted by the Financial Times did not respond to requests for comment.
Over the years, Chinese regulators have been working hard to increase the transparency of the Chinese corporate bond market. Analysts said that the strict review of debt-ridden state-owned enterprises by regulators has become rigid.
Since the state-backed Yongcheng Coal Power defaulted on its bonds in November, the focus has become more prominent. Send out a shock wave Through China’s financial system.
Analysts say that although China has restored its pre-pandemic economic growth in the last quarter of 2020, certain defaults may also be due to economic damage caused by the coronavirus pandemic.
Zhang Xiaoxi, an analyst at Gavekal Dragonomics, said that Chinese leaders have prioritized “hidden debt” this year and are working to change the market’s perception of many companies with “hidden guarantees”, namely The country will rescue them.
She wrote in a research report: “The government hopes to use the strong growth momentum brought about by the post-Covid rebound to deal with structural problems.”
“But it is also because if the hidden debt is not handled properly, the current tightening of credit and the withdrawal of supporting economic policies may lead to greater financial pressure.”
S&P’s Chang pointed out that China’s default rate is still relatively low. He said: “China’s default rate will need to double or triple to reach the level you see in the United States, Europe and emerging markets.”
Other reports by Sherry Fei Ju in Beijing
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