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- China’s central bank could intervene after ‘glaring’ state-firm bond defaults - analyst
China’s central bank could intervene after ‘glaring’ state-firm bond defaults - analyst
CNBC reports that according to Bank of Communications International’s Hao Hong, the People’s Bank of China (PBOC) could step in following a number of recent bond defaults by Chinese state-linked firms.
“In the past couple of weeks the default situation is somehow getting glaring,” Hong, managing director and head of research at the firm, told.
“I wouldn’t be surprised to see the PBOC intervene from here,” he said.
Hong said it’s in the Chinese central bank’s “best interest” to maintain sufficient liquidity to avoid “systemic risk.”
The PBOC previously warned in its financial stability report that factors such as a reliance on borrowing to make debt repayments by some large firms could present a risk to the entire economy.
“I think recently the corporate default is catching a lot of people’s attention,” the analyst said. “I would say that, you know, it is concerning because it’s coming from (state-owned enterprises) but then at the same time, it’s a relatively small amount in a very large market.”
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