As China suffers a rise in company defaults, it looks likely the People’s Bank of China will give the credit default swaps market the go-ahead in coming months, according to the Financial Times. This is the second time interested parties have tried to establish the market, which would allow participants to buy and sell credit insurance that pays out if a Chinese company fails to make payments on its debts. The fact that it is now likely to succeed is a sign of how much has changed in China – the number of defaults is rising, and being state-owned no longer means that the government stands behind every borrower. As of mid-August, 41 companies defaulted on Rmb25.4bn worth of bonds since the beginning of the year.
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