The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters
Opinion
Opinion
Macroscope
Bond defaults will force a needed repricing of risk in China’s credit market
- The sheer volume of debt going bad, particularly involving state-owned enterprises, signals that the government is taking a more market-based approach
- In the longer run, this will encourage greater fiscal discipline and force markets to reflect the true risks, improving transparency in the world’s second-largest bond market
The central business district in Beijing. The spate of defaults from bonds involving state-owned enterprises, once considered safe picks, has spooked investors. But it should also encourage companies to be more accountable for their balance sheets and cash flows. Photo: Reuters