In 2008, as the Lehman Brothers bankruptcy triggered an epic credit crisis across the developed world, everyone braced for the inevitable crisis in the emerging markets that would follow. It didn’t happen. That year’s financial chaos created problems for these economies, whose stock and bond markets dipped far more than those of the U.S. or Europe; but they avoided wholesale defaults or devaluations, Bloomberg News reported. There was no repeat of the cycle of emerging market crises that had roiled the world in past decades.

Underwriters of a new Chinese credit hedging tool just narrowly avoided their first-ever payout in the nation’s $13 trillion bond market, Bloomberg News reported. An investor protection clause on two of Beijing Orient Landscape & Environment Co.’s bonds was triggered last month after the note repayment funds were used for other purposes. Bondholders recently gave waivers, not calling them defaults. The close shave is making underwriters more wary of selling credit risk mitigation warrants (CRMWs), according to Southwest Securities Co.

The governor of China’s central bank sought to ease concerns on Thursday over the growing level of risk at troubled small banks in the country, following the first state takeover of a lender in 18 years, the Financial Times reported. Yi Gang of the People’s Bank of China, speaking at an event in Beijing, said the central bank was “fully capable” of managing risks at small banks, and that it planned to increase the supply of credit to small companies, according to local media and Bloomberg.

When Baoshang Bank published its most recent annual financial statement in mid-2017, it claimed to have a non-performing loan ratio of just 1.68 per cent. Two years later, Baoshang, which has Rmb576bn ($83bn) in assets, has been taken over by the government because of its “serious credit risk”, the first such move in 18 years and a reminder of the hidden perils lurking within China’s financial system, the Financial Times reported. The need for a state rescue has raised questions about financial contagion.

Is it the start of a new era for China’s $42 trillion financial industry, or a one-time shock that will be quickly forgotten? Five days after the first government seizure of a Chinese bank in 20 years, investors are still grasping for answers, Bloomberg News reported. The takeover of Baoshang Bank Co. -- announced with scant explanation on Friday night -- left China watchers guessing at whether it marks an end to the implicit backstop for banks that has served as a linchpin of the country’s financial stability for decades.

China is ducking a bankruptcy test. Baoshang Bank, linked to missing billionaire Xiao Jianhua, has been brought under state control, Reuters reported. Despite threats, Beijing remains wary of allowing even disgraced local lenders to fail. Interest in Baoshang, based in Inner Mongolia, comes thanks to its colourful history. Its biggest stakeholder - and a major borrower - was Tomorrow Holdings, run by Xiao until he vanished in 2017 from a Hong Kong hotel. The insurance conglomerate’s assets are now being sold off piecemeal.

Dollar loans to Chinese borrowers have cratered this year, thanks to both a decline in demand and increased wariness among lenders amid escalating U.S.-China tensions, Bloomberg News reported. Syndicated dollar loan issuance to Chinese borrowers has tumbled 62% from the start of the year through May 17, to $7.3 billion, according to data compiled by Bloomberg. That’s the lowest level since 2012. “Volume is unlikely to rebound anytime soon,” said Fang Lei, a Hong Kong-based managing director of Asia Pacific debt origination and advisory at Credit Agricole SA.

Congo Republic’s senate on Monday voted to restructure some of its debt with China, a move that the International Monetary Fund has said was necessary to unlock financial support, the finance ministry said. Negotiations over a bailout for the oil-dependant economy have dragged on since 2017, as Congolese authorities failed to convince the IMF they were doing enough to control the national debt or tackle corruption, Reuters reported.

A Chinese display product maker has been questioned by the Shenzhen Stock Exchange on its cash usage, joining a growing list of firms whose financials are being scrutinized by the nation’s regulators, Bloomberg News reported. Beijing-based Tunghsu Optoelectronic Technology Co. was asked by the bourse to explain the rationale in paying high expenses on its debts when it reported ample cash in 2018, according to a statement on Wednesday. The company was also required to spell out the reasons for issuing convertible bonds when it reported 19.8 billion yuan ($2.9 billion) cash as of end-2018.

China’s banking and insurance regulator has issued draft rules outlining tougher norms for risk assessment of banks, as part of Beijing’s efforts to rein in financial risks, The Wall Street Journal reported. According to the draft rules released by the China Banking and Insurance Regulatory Commission on Tuesday, banks will have to recognize not only nonperforming loans but also defaulted bonds, interbank assets and other investment as nonperforming assets.