China Bailouts Questions as Second Company Faces Default
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China’s corporate bond market is facing its second default after a builder said it may fail to make a payment next week, fueling speculation the government is stepping back from its practice of bailing out borrowers.
The average yield on one-year interbank notes rated AAA jumped 10 basis points, the most in eight months, to 4.88 percent yesterday after Huatong Road & Bridge Group Co. said it may miss payment on a 400 million yuan ($64.4 million) note due July 23. One-year swaps have jumped 38 basis points this week, the biggest increase in more than a year, to 4.11 percent as of 12:24 p.m. in Shanghai.