UK insurer on lookout for China debt default as US$112b of bonds mature

Aviva, Britain's largest insurer by assets, is looking out for default red flags as Beijing's crackdown on shadow banking collides with the heaviest debt repayment schedule in more than two years this month.

Borrowers from the world's second-largest economy have the equivalent of US$112 billion of all types of bonds maturing this month, the most since April 2011.

Mainland firms account for eight of the 10 financially weakest issuers of US dollar-denominated notes in Asia outside Japan, according to a Standard Chartered report on profitability, leverage and capital structure dated July 5.

"It's important to look at your portfolio and decide whether the corporates in which you hold positions have any financing vulnerabilities," said Tim Jagger, a Singapore-based fixed-income portfolio manager at Aviva Investors Asia, a unit of Aviva.

"If they are highly dependent on bank debt or trust financing, which is obviously an area that is receiving the authorities' attention, that's an obvious red flag."

Shipbuilder China Rongsheng Heavy Industries is seeking financial help from the government, three months after Suntech Power defaulted on US-dollar bonds.