A string of defaults by Chinese state-owned companies has sent shockwaves across the world’s second-largest credit market. But some bonds have fared much worse than others as investors clamber to avoid the next potential blowup. Among the most notable losers: notes issued by Pingdingshan Tianan Coal Mining Co., Jizhong Energy Group Co., Tianjin TEDA Investment Holding Co. and Yunnan Health & Culture Tourism Holding Group.
While none of the companies have missed debt payments, and all four are rated AAA by Chinese domestic ratings firms, their bonds have tumbled by at least 14% since Nov. 10. That’s when a surprise default by a state-owned Chinese coal producer cast fresh doubt on the implicit guarantees that have long underpinned government-backed borrowers. “Most of the onshore bonds hit hardest this time share a common symptom: their profitability has lagged far behind their debt growth,” said Li Yunfei, credit analyst at Pacific Securities Co. “Repricing of some onshore bonds, though it occurred abruptly and quickly, is a rational outcome of the recent defaults.”
Pingdingshan Tianan Coal said in a written reply to Bloomberg News that the company was aware of declines in some of its bonds, but declined to comment further. An official in charge of information disclosure from Yunnan Health & Culture Tourism didn’t answer calls or respond to an an email seeking comment.