Chinese Firms Owe Roughly $24 Billion in Overdue Credit Bonds: Borrowers include state-run enterprises who were previously rated AAA by Chinese bond rating agencies

Epoch Times ^ | 12/26/2020 | Nicole Hao

[SeekAndFind]

The latest indicator of China’s economic woes is the number of credit bonds nationwide that could not be repaid on time—164 of them, involving a sum of 160 billion yuan (about $24.43 billion).

Borrowers include state-run enterprises who were previously rated AAA by Chinese bond rating agencies.

The Chinese market has three types of bonds: government bonds that were issued by different level governments; credit bonds issued by companies; and convertible bonds, issued by listed companies and which can be converted into shares of common stock in the issuing company or cash of equal value.

Chinese state-run media Economic Observer reported the latest bond market statistics collected by Wind, a Chinese private financial services company.

“164 credit bonds that were issued by 27 enterprises were in repudiatory breach by Dec. 18 in this year,” it reported. “Among them, the sum breached by state-run enterprises was 51.897 billion yuan ($7.92 billion), or three times more than the figure in 2019, 12.93 billion yuan ($1.97 billion).”

For example, Henan Yongmei is a state-run coal company located in central China’s Henan Province and was rated AAA in the financial market. On Nov. 10, Yongmei announced that it could not pay a credit bond that matured, with principal and interest valued at over 1 billion yuan ($150 million).

On Nov. 23, Yongmei announced that it also could not replay its other credit bonds, valued at over 2 billion yuan. At the same time, Yongmei had 21 credit bonds that had not yet matured, valued at 21.41 billion yuan ($3.27 billion) in total.

According to company data, its current debt-to-asset ratio is over 77 percent. On Nov. 11, the second day after Yongmei couldn’t pay the matured credit bond, China Chengxin Bond Rating Agency downgraded Yongmei’s rating from AAA to BB.

[Clemenza]

China and her people are enemies of our nation and of Western Civilization. No student and spousal visas should even be allowed.

[Revolutionary]

This is many, many, many times worse. All this corporate paper is essentially worthless. The much touted Chinese economy has been on the edge of collapsing for years. They were propped up by the massive trade imbalance. Remove that and it is only a matter of time before a major Chinese financial meltdown. Trump has them by the balls. That is why they were heavily involved in the election steal. Among other reasons.