The Chinese government plans to probe the ability of corporate bond issuers to repay their debts as an increasing number of businesses default amid an economic slowdown and tight liquidity conditions, the Financial Times reports.
The announcement by the National Development and Reform Commission, which is in charge of enterprise bonds, comes weeks after private equity firm China Minsheng Investment Group missed a payment on a $442 million private placement bond.
Bond defaults hit an all-time high in China last year and a huge number of bonds are set to mature in 2019.
Local officials plan to investigate companies’ finances and work to protect bondholders’ rights, according to the announcement.