China’s campaign to cut leverage and instill corporate discipline is reshaping the nation’s $12 trillion credit market.
One of China’s most prolific debt issuers hasn’t sold a single dollar bond in 17 months, the longest dry spell since 2013. An investment grade-rated conglomerate mostly owned by the government is facing a cash crunch in a test of state support. Analysts at UBS Group AG and Goldman Sachs Group Inc. now say the notion of ‘too big to fail’ no longer applies in China as defaults this year exceed $23 billion, a record pace.
