Bankruptcy Run in Wealthy China Province Spooks Creditors
- Investors may apply greater scrutiny now to Shandong: Moody’s
- Shandong debtors extended guarantees to other firms’ debt
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A series of bankruptcy filings by major private-sector bond issuers in China’s third-wealthiest province is shining a spotlight on aggressive efforts by local governments to manage unsustainable debt loads.
Four debtors have entered bankruptcy procedures since the start of November in Dongying, a city of 2 million in the eastern province of Shandong that once thrived with a booming tire-making industry. While China sees thousands of bankruptcies each year, instances of court-led restructuring of publicly issued bonds have been rare. Authorities in other cases have encouraged workouts with creditors, raising questions about the Dongying examples.