Extremely tight credit conditions and a slowdown in China's economy led to a record amount of corporate defaults last year, according to experts.
div > div.group > p:first-child"> An economic slowdown and extremely tight credit conditions pushed corporate debt to a record high in China last year, according to experts.
Offshore corporate dollar bonds, or U.S. dollar-denominated debt issued by Chinese companies, followed the same trend. Nomura said the amount of such debt rose to $7 billion in 2018, from none the year before. Companies are facing tighter monetary conditions, aggravated by high borrowing costs, DBS said, adding that real interest rates shot up to 4.35 percent in January, from as low as -3.1 percent at the start of 2017.
Last year's defaults hit mostly companies in the private sector as compared to the last cycle in 2016, according to Edmund Goh, Asian fixed income investment manager at Aberdeen Standard Investments.
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