The singling out of three debt types most at risk by the People’s Bank of China has prompted Nomura Holdings Inc. to warn that rising borrowing costs will make it even harder to avoid a default by these issuers.
The PBOC will enhance monitoring of local government financing vehicles, industries with overcapacity and property developers to prevent default risks from spreading, according to its fourth-quarter policy report issued on Feb. 8. Jinzhou Economic Technology Zone Development Group Co., an LGFV in Liaoning province, sold new seven-year bonds at 9.1 percent in January, while Guangxi Nonferrous Metal Group Co. issued nine-month bills at 8.5 percent. That’s almost twice as high as the yield on 2021 government debt.
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