China’s state asset manager sought to ease market worries about possible defaults, pledging on Wednesday to scrutinize bonds maturing in three months and saying a state-owned railway firm has managed to avoid default.
In a bid to bolster confidence in state-owned enterprises, the State-owned Asset Supervision and Administration Commission (SASAC) said it would “further improve its dynamic system to monitor debt risks, and will put bonds maturing over the next three months in scrutiny spotlight.”
The commission said it will “analyse such bonds one by one, make timely precautions, and actively deal with risks, in order to prevent bond defaults, and maintain stability of China’s financial markets.”
It also said China Railway Materials Co Ltd had made full payments in time on 6.8 billion yuan ($1.02 billion) worth of bonds due this year, after SASAC prompted the company to meet its obligations.
In April, China Railway Material suspended trade in 16.8 billion yuan worth of debt instruments as it become the first enterprise owned by China’s central government to encounter repayment difficulties.
China’s debt market has witnessed an increasing number of defaults over the past year as the economy slows, amid signs that the government is increasingly unwilling to bail out private-owned companies.
Regarding possible defaults by central government-controlled enterprises, SASAC said it has this year conducted health checks on related debts on a regular basis, and urged companies to deal with such risks properly.
China’s banking regulator has said the country will not open its treasury futures market to commercial banks in the near future due to concerns about a possible jump in volatility as the number of bond defaults grows.
($1 = 6.6545 Chinese yuan)