A Default Storm Is Brewing Over China Junk Bonds
- A record amount of bonds rated AA or lower will mature in 2017
- Net note sales turn negative in December, lowest on record
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A default storm is brewing for China’s lower-rated corporate bonds with a record amount maturing just as borrowing costs surge.
Regulators are curbing leverage, pushing up the cost of capital and adding to challenges for weaker borrowers, according to China Citic Bank Corp., a unit of the nation’s largest investment conglomerate. On Jan. 16 alone, two companies missed payments. About 29 notes defaulted last year, up from seven in 2015.