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Bloomberg News, Bloomberg News
(Bloomberg) -- The default of a Chinese coal miner has triggered mounting concern over the health of state-owned firms and their lenders.
The SSE 50 Index of Shanghai’s largest stocks slumped as much as 2.1% on Friday, led by banks and insurers. Bonds of Chinese commodity producers have fallen this week after Yongcheng Coal & Electricity Holding Group Co. defaulted on a 1 billion yuan ($151 million) note.
Coal miners are canceling planned sales of local bonds or extending pricing deadlines as investors turn sour on the sector. Confidence in state-linked firms has already taken a hit following reports Beijing’s local officials were sent to review the finances of prominent Chinese chipmaker Tsinghua Unigroup Co.
“The market fears more unexpected defaults will come,” said Xiangjuan Meng, an analyst at Shenwan Hongyuan Securities. “Investors are selling riskier bonds at lower prices. Some funds and products may face redemptions.”
Chinese dollar bond spreads rose 1.9% Thursday, the most since Sept. 25, ending seven straight days of tightening, Bloomberg-compiled data show. Spreads on AAA rated local bonds have climbed to the highest in a month.
Industrial Bank Co. and China Everbright Bank Co. tumbled more than 3.5% on Friday, while Ping An Life Insurance Group Co. slid 2.6%. An index tracking shares of state-owned enterprises lost 1.5%, on track for a fourth day of losses.
“The credit debt market woes involve some pretty highly rated listed companies and their yield to maturity levels are now close to those of junk debts,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. “Some investors worry that bad loan ratios at banks will spike too.”
©2020 Bloomberg L.P.
Bloomberg News, Bloomberg News
(Bloomberg) -- The default of a Chinese coal miner has triggered mounting concern over the health of state-owned firms and their lenders.
The SSE 50 Index of Shanghai’s largest stocks slumped as much as 2.1% on Friday, led by banks and insurers. Bonds of Chinese commodity producers have fallen this week after Yongcheng Coal & Electricity Holding Group Co. defaulted on a 1 billion yuan ($151 million) note.
Coal miners are canceling planned sales of local bonds or extending pricing deadlines as investors turn sour on the sector. Confidence in state-linked firms has already taken a hit following reports Beijing’s local officials were sent to review the finances of prominent Chinese chipmaker Tsinghua Unigroup Co.
“The market fears more unexpected defaults will come,” said Xiangjuan Meng, an analyst at Shenwan Hongyuan Securities. “Investors are selling riskier bonds at lower prices. Some funds and products may face redemptions.”
Chinese dollar bond spreads rose 1.9% Thursday, the most since Sept. 25, ending seven straight days of tightening, Bloomberg-compiled data show. Spreads on AAA rated local bonds have climbed to the highest in a month.
Industrial Bank Co. and China Everbright Bank Co. tumbled more than 3.5% on Friday, while Ping An Life Insurance Group Co. slid 2.6%. An index tracking shares of state-owned enterprises lost 1.5%, on track for a fourth day of losses.
“The credit debt market woes involve some pretty highly rated listed companies and their yield to maturity levels are now close to those of junk debts,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. “Some investors worry that bad loan ratios at banks will spike too.”
©2020 Bloomberg L.P.
