Read on Twitter
1/3
The sudden RMB 1 billion default by a state-owned coal mining company in Henan province ("which just last month got the highest possible rating from a domestic credit rating company,") caused bond prices of other coal companies to "plunge". https://www.caixinglobal.com/2020-11-13/default-by-henan-coal-mining-company-sends-tremors-across-china-101626996.html?cxg=web&Sfrom=twitter
The sudden RMB 1 billion default by a state-owned coal mining company in Henan province ("which just last month got the highest possible rating from a domestic credit rating company,") caused bond prices of other coal companies to "plunge". https://www.caixinglobal.com/2020-11-13/default-by-henan-coal-mining-company-sends-tremors-across-china-101626996.html?cxg=web&Sfrom=twitter
2/3
We'll probably soon see some sort of imposed restructuring that reverses the default. While regulators have long known that they must allow defaults if they want to impose lending discipline in the market, they always eventually retreat because of the same two problems.
We'll probably soon see some sort of imposed restructuring that reverses the default. While regulators have long known that they must allow defaults if they want to impose lending discipline in the market, they always eventually retreat because of the same two problems.
3/3
First, and most obviously, defaults threaten disruption in the bond markets by forcing a chaotic repricing. Second, and perhaps less well understood, real lending discipline would all but eliminate the ability of the government to set GDP growth targets.
First, and most obviously, defaults threaten disruption in the bond markets by forcing a chaotic repricing. Second, and perhaps less well understood, real lending discipline would all but eliminate the ability of the government to set GDP growth targets.
