OASIS FORUM Post by the Golden Rule. GoldTent Oasis is not responsible for content or accuracy of posts. DYODD.

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The last time this happened the Chinese stock mkt did a moonshot as billions were injected by the government–different this time?

Posted by Richard640 @ 11:35 on December 15, 2019

China’s “Moment Of Reckoning” Arrives: $38BN State-Owned Giant Announces Largest Dollar Bond Default In Two Decades

Two weeks ago we previewed what we said would soon be a D-Day for China’s bond market, as a massive commodities trader and Global 500 state-owned enterprise was set for an “unprecedented” bond default.

As of last week, this historic default is now in the history books after Tewoo, the closely watched Chinese commodities trader, became the biggest dollar bond defaulter among the nation’s state-owned companies in two decades, in what Bloomberg called a “moment of reckoning” for Beijing as China struggles to contain credit risk in a weakening economy, as bond defaults hit an all time high and are set to keep rising in the coming years.

Last Wednesday, Tewoo Group announced results of its “unprecedented” debt restructuring, which saw a majority of its investors accepting heavy losses, and which according to rating agencies qualifies as an event of default. As a result of the default, until recently seen as virtually impossible for a state-owned company, investors’ perceptions are undergoing a dramatic U-turn about government-owned borrowers whose state-ownership had for years offered an ironclad sense of security.

No more: The fact that a state-owned enterprise such as Tewoo has now defaulted on repaying its dollar bonds in full, confirms that Beijing will no longer bail out troubled SOEs, let alone private firms, perhaps due to the strains imposed by the economy which while growing at just below 6%, is slowing the most in three decades. It also raises concerns over the Chinese province of Tianjin, where Tewoo is based, following a series of rating downgrades and financing difficulties suffered by some of the city’s state-run firms. The metropolis near Beijing also has the highest ratio of local government financing vehicle bonds to GDP in China.

OASIS FORUM Post by the Golden Rule. GoldTent Oasis is not responsible for content or accuracy of posts. DYODD.

The last time this happened the Chinese stock mkt did a moonshot as billions were injected by the government–different this time?

China’s “Moment Of Reckoning” Arrives: $38BN State-Owned Giant Announces Largest Dollar Bond Default In Two Decades

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