Bond defaults in China this year have already matched last year’s all-time high and are set to break the record amidst an ongoing trade war and slowing growth.
Defaults by number of issuers have totalled 44 in the first three quarters of 2019, according to Fitch Ratings, or 1.03 percent of all issuers. The figure has already matched 2018’s full count of defaulted issuers which marked a historical high.
89 percent of the defaults year-to-date were from private sector issuers compared with 87 percent in 2018.
SME Struggles
«Defaults are likely to continue rising, as many medium and small-sized private firms are facing significant refinancing pressures,» said Zhang Shuncheng, associate director of corporate research at Fitch, in an «SCMP» report. «Private companies suffer from many problems in their own operations, not to mention the impact from the slowing economy and tight credit environment.»
Since China’s first bond default in 2014, the rate has steadily climbed with 29 delinquent issuers in 2017 and 117 in 2018. A Goldman Sachs estimate this month claimed that Chinese firms have missed payments for onshore bonds with value totaling more than 100 billion yuan ($14 billion).
