String of defaults by Chinese companies is sending shockwaves through world's second-largest credit market

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Here\u0027s why some investors are worried

While none of the companies have missed debt payments, and all four are rated AAA by Chinese domestic ratings firms, their bonds have tumbled by at least 14 per cent since Nov. 10. That’s when a surprise default by a state-owned Chinese coal producer cast fresh doubt on the implicit guarantees that have long underpinned government-backed borrowers.

Pingdingshan Tianan Coal said in a written reply to Bloomberg News that the company was aware of declines in some of its bonds, but declined to comment further. An official in charge of information disclosure from Yunnan Health & Culture Tourism didn’t answer calls or respond to an email seeking comment.An official in charge of Tianjin Teda Investment’s bond issuance department declined to comment when reached by phone. Multiple calls made to Jizhong Energy’s general line were not answered.

The local-government financing vehicle from the northern port city also faces funding pressure. Its quick ratio was 0.49 at the end of June, compared with 0.46 at the end of 2019, Bloomberg data show. It faces 17.6 billion yuan of bond repayments by the end of 2021. In September, Caixin magazine reported that the Tianjin municipal government held a meeting with various local financial institutions to discuss how to support the indebted firm.

 

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Take a look at zecotek photonics please. Listed in Canada, took investors money. Then transferred everything to a Chinese company and is now delisted.

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