Of those, five are selling debt issued by state-owned companies, according to the people. These banks, along with another that hasn’t cut its holdings, are also reviewing their positions and requiring senior-executive approvals for any additional purchases of corporate bonds, the people said. Dollar bonds sold by several Chinese state-owned firms tumbled this week after a default by state-owned Yongcheng Coal & Electricity on Tuesday. That default and growing concerns over a liquidity crunch at Tsinghua Unigroup have sparked fresh concerns over government support for weaker state-owned firms, according to Wu Qiong, executive director at BOC International. Three commercial banks also decided this week that they will no longer accept high-rated corporate bonds as collateral for repo trades and that all corporate bond investments will need to be approved by the bank’s headquarters, according to people familiar with the matter.

Source: The Standard November 13, 2020 08:03 UTC