China Braces For December D-Day: The "Unprecedented" Default Of A Massive State-Owned Enterprise | WHAT REALLY HAPPENED

China Braces For December D-Day: The "Unprecedented" Default Of A Massive State-Owned Enterprise

omething is seriously starting to break in China's financial system.

Three days after we described the self-destructive doom loop that is tearing apart China's smaller banks, where a second bank run took place in just two weeks - an unprecedented event for a country where until earlier this year not a single bank was allowed to fail publicly and has now had no less than five bank high profile nationalizations/bailouts/runs so far this year - the Chinese bond market is bracing itself for an unprecedented shock: a major, Fortune 500 Chinese commodity trader is poised to become the biggest and highest profile state-owned enterprise to default in the dollar bond market in over two decades.

In what Bloomberg dubbed the latest sign that Beijing is more willing to allow failures in the politically sensitive SOE sector - either that, or China is simply no longer able to control the spillovers from its cracking $40 trillion financial system - commodity trader Tewoo Group - the largest state-owned enterprise in China's Tianjin province - has offered an "unprecedented" debt restructuring plan that entails deep losses for investors or a swap for new bonds with significantly lower returns.

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