China

China Energy Reserve & Chemicals Group Co. said it hasn’t paid a $350 million bond that matured earlier this month, in the latest example of China’s deleveraging campaign choking off financing for some companies, Bloomberg News reported. The oil and gas producer, which has $1.8 billion of offshore notes outstanding, cited “tightening in credit conditions” for the default.

Chinese regulators are making progress in their attempts to tame the country’s $10 trillion shadow banking sector, but after a one-year squeeze on the riskiest areas of the industry, there’s still a lengthy battle ahead, Bloomberg News reported. "We’ve had a good beginning to a long journey," said Larry Hu, a Hong Kong-based economist at Macquarie Securities Ltd. "Some components of shadow banking are shrinking and interbank leverage has started to drop.

S&P Global Inc., the financial-information giant, plans to build a stand-alone ratings business in China, bringing it a step closer to expanding its presence in one of the world’s biggest bond markets, The Wall Street Journal reported. The company has notified the Chinese government of a plan to launch an independent credit-ratings firm in the country, an S&P spokesman said Wednesday. A trade deal last year opened up China to U.S. ratings firms. S&P is speaking with regulators on the entrance. Moody’s Corp.

As corporate defaults pile up in China’s onshore bond market, a unit of a once-promising energy conglomerate with $4.8 billion of debt and a checkered past said it won’t be able to meet its payment obligation Monday, Bloomberg News reported. CEFC Shanghai International Group Ltd., a unit of the privately-held CEFC China Energy Co., failed to repay 2 billion yuan ($313 million) of bonds but said it will seek to pay back the notes in six months, according to a statement on the Shanghai Clearing House website.

Kingtec Steel Corporation, based in China’s far northwestern region of Xinjiang, is preparing to apply for bankruptcy as a result of spiraling debt, the company said in a statement on Friday. Kingtec said it would be unable to pay all of its debts, including a 550 million yuan ($86.26 million) bond issued in 2013, Reuters reported. It blamed its problems on the poor steel business environment in Xinjiang as well as a “gradual deterioration” in its own operating conditions. It has ceased production.

Creditor J&T Private Investments (JTPI) said on Thursday it had taken over shareholder rights and installed crisis management at CEFC Europe, the Czech-based part of troubled Chinese conglomerate CEFC China Energy, Reuters reported. The move is a sign of fresh woes for CEFC Europe which bought Czech assets from real estate to breweries, an engineering firm, an airline and a football club, under an investment drive promoted by Czech President Milos Zeman. CEFC Europe protested against the move, saying it had the money ready to cover the debt.

Not long ago China was a leading culprit in global economic imbalances. Whether blame was ascribed to its undervalued yuan or its frugal people, the problem seemed clear. China was selling a lot abroad and buying too little back, The Economist reported. One data-point summed this up: its currentaccount surplus reached 10% of GDP in 2007, well above the level that is generally seen as reasonable. Far less attention has been paid to its steady decline since then.

China's stock exchanges have stepped up their scrutiny of the booming asset-backed securities (ABS) market, publishing new rules that require prompt information disclosure and risk management updates from issuers, the International New York Times reported on a Reuters story. China's ABS market has exploded over the past few years as the government's crackdown on shadow banking pushed borrowers to alternative sources of finance. Issuance of ABS jumped to 1.5 trillion yuan ($236.84 billion) last year, from almost zero in 2013, according to consultancy China Securities Analytics.

With corporate-debt defaults on the rise, China’s securities regulator will probe bond funds to ensure that they have proper risk controls in place, according to people familiar with the matter. The China Securities Regulatory Commission’s investigation will include whether individual firms’ funds are shuffling high-risk bonds between them, said the people who asked not to be named as the discussions aren’t public, Bloomberg News reported. One suspicion is mutual-fund companies may be motivated to beautify their holdings to avoid a mass withdrawal by investors, the people said.

A Shanghai court imprisoned a tycoon who used a mountain of debt to buy the Waldorf Astoria hotel. Small Chinese companies are increasingly saying they cannot repay their bills, as money gets more expensive or harder to find, the International New York Times reported. For other private businesses, the cost to borrow has shot up. Faced with the looming consequences of a decade-long borrowing binge, the Chinese government is intensifying its efforts stamp out risky lending and speculative froth from the world’s second-largest economy.