MNI: Policy, Economy To Aid China Corp Financing: Ex-SAFE Head

by Iris Ouyang

     LONDON (MNI) - Stable policies and positive economic fundamentals are the

main factors to help companies tackle financing problems, particularly

cross-defaults, a former head of the State Administration of Foreign Exchange

told MNI Friday.

     "Regulations and macro policies should be robust," to help resolve current

debt risks in the corporate sector, said Hu Xiaolian, who also served as a

deputy governor at the People's Bank of China

     Cross-defaults, when one bond default causes wide-spread cautious sentiment

among lenders and investors, is helping drive financing difficulties for

companies, she said earlier this month.

     Hu, currently chair of the Export-Import Bank of China, has cautioned over

tighter cross-market credit spreads, calling for more policy action to stop it.

     Chinese corporate bond defaults soared last year amid an economic slowdown

and tighter financial regulations. Onshore yuan-denominated bond defaults rose

CNY159.6 billion last year, almost five times that seen a year earlier,

according to Nomura. The amount of defaulted dollar-denominated corporate bonds

increased to $7 billion in 2018 from zero in 2017.

     Lower risk appetite, fuelled by the trade dispute between China and the

U.S. exaggerated the situation, together with the Federal Reserve's benchmark

rate hikes last year, also hindered refinancing by Chinese companies.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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