China bond defaults stay low even as NPL formation moderates: Morgan Stanley

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SINGAPORE (June 11): Bond defaults in China have been on the rise, but non-performing loans (NPL) formation has seen further moderation through still healthy corporate growth, low chance of broad-based liquidity issues, and already sizeable NPLs digested in 2014-2017, according to Morgan Stanley.

In a Sunday report, analyst Richard Xu says, “We believe the renewed credit quality concerns create good buying opportunities.”

But how does the trend of rising bond defaults fit with progress of the overall financial cleanup?

Since 2016, progress on supply-side reform, capital market leverage reduction and liquidity risk management has helped prepared China’s system for new policies to address the issues of non-standardised credit (NSCA) and wealth-management products (WMP)... (Click here to read the full story)