OREANDA-NEWSOrganizations don't have enough funding due to the fact that the authorities tightened control over the shadow banks, Bloomberg found out. From the beginning of the year, Chinese firms, according to his data, have already defaulted on domestic bonds by $ 5.8 billion. The Chinese bond market in 2019 may face the largest default in its history of $ 13 trillion. This is evidenced by a study of Bloomberg.

According to data collected by the agency, in the first four months of this year, Chinese companies have already defaulted on domestic bonds worth 39.2 billion yuan ($ 5.8 billion). This is about 3.4 times more than the same period in 2018, notes Bloomberg. In addition, according to him, the pace of development of this process is now three times higher than in 2016, when the risks of default were concentrated in the first half of the year. The trend, Bloomberg emphasizes, is clear: if nothing changes, 2019 will demonstrate a new maximum by default for the Chinese bond market.

The reason for this agency explains the reduction of financing companies. China, says Bloomberg, continues to put pressure on banks to provide loans to private businesses (especially small and medium). At the same time, the country's authorities, the agency reminds, concentrated on reducing the shadow banking system, where credit decisions were taken with less control from the regulatory authorities. Thus, the surge of default, the authors of the study believe, began at the end of 2017 and continues to this day. In 2016, in their opinion, the Chinese leadership tried to reduce excess production capacity, which ultimately affected the credit markets.

According to Bloomberg, among private companies that defaulted on most bonds this year is Neoglory Holding Group (the main enterprise for the conglomerate), Shandong SNTON Group, China Minsheng Investment Group Corp., Citic Guoan Group Co. and Goocoo Investment Co.