China is hurtling toward another record year of onshore bond defaults

China is hurtling toward another record year of onshore bond defaults, testing the government’s ability to keep financial markets stable as the economy slows and companies struggle to cope with unprecedented levels of debt. At least 15 defaults since the start of November have pushed this year’s total to 120.4 bn yuan ($17.1 bn), within a hair’s breadth of the 121.9 bn yuan annual record in 2018. While the defaulted notes amount to a small sliver of China’s $4.4 tn onshore corporate bond market. (Bloomberg)


President Donald Trump reminded financial markets that he’s comfortable heading into an election year using tariffs as his main tool of international economic leverage. “I don’t have a deadline,” Trump said Tuesday in London after being asked if he sees phase one of a trade deal with China concluding this year. “I like the idea of waiting until after the election for the China deal. But they want to make a deal now and we’ll see whether not the deal is going to be right.” (Bloomberg)

Treasuries surged Tuesday, driving yields down the most since August, as investors braced for the risk of a protracted trade war that could weigh on growth and spur the Federal Reserve to cut rates again. The rally in the world’s biggest bond market took off after U.S. President Donald Trump said he’s willing to wait a year before striking a trade agreement with China. It marked the second straight day that yields rose in Asian and early European hours, only to tumble back on re-emerging trade concerns. (Bloomberg)



Source: Danareksa Debt Research
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