Huarong Fallout Makes Provincial State Firms Even Less Popular
- Local SOEs’ debt sales plunge in some areas as maturities loom
- State firms have become biggest source of defaults in China
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The apparent lack of central government support for China Huarong Asset Management Co. is deepening concern about the level of backing for state-owned enterprises at the provincial level.
SOEs based in Henan, a landlocked province reliant on agriculture, and Shanxi, an important coal-producing region, are struggling to sell bonds despite efforts by local governments to shore up investor confidence. Issuance of new debt by nonfinancial SOEs in Henan has plunged 67% in 2021 from a year earlier, while sales in Shanxi have tumbled 75%, according to data compiled by Bloomberg.