Highly indebted Chinese companies are sending shivers among global investors with $2.14 trillion of bonds due by 2023, according to NIKKEI Asia. Investors believe Beijing is unlikely to bail out the indebted state-backed entities causing a selling pressure in the bond markets.
The $2.14 trillion maturing debts owed by Chinese companies is now 60% more than the value of bonds that were due between 2018 to 2020.
Investors expect a rise in defaults by Chinese corporate borrowers which could have an impact on global markets.
China Huarong Asset Management is already threatened and has successfully been approved to postpone $100 million in debt repayment until the end of August.
Construction, civil engineering, rail, and grid companies are expected to redeem $600 billion of all Chinese corporate debt by 2023.
Since Chinese entities issue short-term bonds with maturities of about one to three years, continued issuance of new debt is expected to keep the value of redemptions rising.
Foreign investors are now keen on trends in foreign currency-denominated debt, which is about 10% of the market.
Investors are now fleeing bonds by Chinese enterprises, with defaults reported to occur in at least 10 dollar-denominated bonds since 2020.
Chinese stocks are currently declining as the Yuan gains. CSI 300 is down 0.32%, USDCNY is down 0.25%
