China State Firms Once Deemed ‘Safe’ Now Rocked by Defaults

Rising defaults by China’s state firms are showing the need for bond investors to be much savvier about those borrowers -- no easy feat in a country where government decisions and business operations lack transparency, Bloomberg News reported. Five state-linked companies -- from a coal miner to a top chipmaker and an auto firm with ties to BMW AG -- have defaulted for the first time in the onshore bond market this year. That’s the most since 2016. In the secondary market, the average yield of more than 700 riskier bonds of local state-owned enterprises jumped to 17% from 13.4% after a payment failure by Yongcheng Coal & Electricity Holding Group Co., Bloomberg-compiled data show. Read more