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发帖数: 4825 | 1 January 6, 2012 12:52 pm
New ground for China’s bond market
By Simon Rabinovitch in Beijing
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China’s fast-growing bond market broke new ground to start 2012, just not
the kind that its proponents were hoping to break: over the past few days it
has served up its first-ever triple A bond default and its first-ever
default on a special bond designed for smaller businesses.
Both were quickly resolved and creditors were repaid in full, but the
defaults shone a rare light on the mounting credit risks in China that could
strain its financial system in the years ahead.
Defaults by Chinese companies on bonds issued abroad are not unusual. In the
domestic market, they are still a new phenomenon.
“Defaults will be increasingly frequent because so much was borrowed over
the past few years that has to be paid back now,” said Wang Jing, head of
fixed-income research with Jinyuan Securities.
The turbulence of the past week also underscored the increasing complexity
of the Chinese economy, and the new dangers that this entails.
Banks are still the primary vehicles for doling out credit in China, but a
boom in bonds and non-bank financial institutions like loan guarantee
companies – which played a role in backstopping one defaulted bond – have
spread risks far more widely.
That dispersal of risk, limiting the direct exposure of banks, is exactly
what regulators wanted to see, Mr Wang said. Whether their strategy has made
China’s financial system safer will begin to become clear this year as
default rates rise.
The first default of 2012 had the potential to send shockwaves through the
Chinese economy, except for the fact that it lasted only a few hours.
Angang, one of China’s largest producers of steel, had been due to repay a
AAA-rated Rmb5bn three-year note by January 4. At 10.41 am that day, the
China Government Securities Depository Trust & Clearing Co. announced it “
had not received sufficient funds from the issuer”. By 4.10 pm, however, it
posted a new notice, saying the debt had been paid.
An unnamed Angang official told Chinese media that it had been a simple
misunderstanding with the clearing company. Angang’s profits plunged 91 per
cent year on year in the first three quarters of 2011 as steel prices
weakened, but there is no questioning its deep pockets – the listed company
’s parent is a state-owned enterprise.
Angang’s curious flirtation with default might have been dismissed as a
mere technicality, but reports soon surfaced of yet another bond in trouble.
Beijing DG Telecommunications Equipment Co, a manufacturer of wireless
systems, said it had applied to its bond guarantor to cover debts that it
could not pay.
It had borrowed Rmb44mn in 2010 as one of 13 small and medium-sized
companies whose debt issues were combined together into a single bond – an
innovation that regulators hoped would divide up risks for creditors and so
make it easier for the companies to obtain direct financing.
In a sign that the Chinese financial system was working as intended for the
time being, the bond guarantor, Beijing Zhongguancun Sci-tech Guarantee Co,
said that it had arranged for full payment of the amount in default.
The Shanghai Securities News, an official paper, struck a positive note,
while acknowledging the risks: “Monetary policy is already gradually being
relaxed. There will be sporadic outbreaks of credit problems in the first q
uarter, but the situation will improve after that and the bond market will
not be badly hit.”
China’s corporate bond market has expanded dramatically in recent years.
Debt issuance by mainland companies reached Rmb2.58tr last year, 52 per cent
more than in 2010, according to Thomson Reuters data.
The biggest default risks, however, are still concentrated in bank loans, as
that was the form of financing mainly used to pay for China’s massive
stimulus programme during the global financial crisis. Local governments
owed Rmb10.7 trillion by the end of 2010, and 53 percent of that is coming
due by the end of 2013, according to the national auditor.
Additional reporting by Chen Xiaoming |
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