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China’s Corporate Bond Defaults Unveil Hidden Blind Spots

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China’s policy makers have been walking a tightrope between countering the economic damage caused by the Covid-19 crisis and fueling another debt bubble from the latest spending spree.

Since the first onshore bond default in 2014, there have been 395 onshore delinquencies. Of that, 31.9% of the bonds that failed to repay debts were issued in 2016, a boom year for onshore companies raising funds when yields fell as low as 3.49% prior to deleveraging efforts.