Record Downgrades Foreshadow First Onshore Default

China’s rating firms cut the most bond issuer rankings on record in June and brokerages said they are preparing for the onshore market’s first default as the world’s second-biggest economy slows.

A total of 38 issuers were downgraded last month, according to Guotai Junan Securities Co., the most since the nation’s third-biggest brokerage started compiling the data in 2005. Some 86 firms were upgraded, down from 88 a year earlier. China Chengxin Securities Rating Co. lowered Zhuhai Zhongfu Enterprise Co.’s debt rating to AA- from AA on June 28, causing the yield on the beverage package maker’s May 2015 bonds to almost triple to 15.01 percent.