CHINA'S CREDIT-RATING agencies do not disguise their love for the state. Yongcheng Coal and Electricity's state pedigree was at the top of a list of merits in a recent credit appraisal by CCXI, one such agency, which expressed its confidence in the group on October 10th with a top-notch AAA rating on a1bn-yuan ($15201) bond. Yongcheng's default a month later on a different 1bn-yuan bond has sent a shockwave through China's $14trn bond market. The company paid overdue interest three days later, but not before investors dumped state-backed debt with links to Henan province, the region in central China where it is based. The jarring news that a state group with a recent AAA-rating had defaulted halted at least 20bn-yuan-worth of planned debt issuance over the following week, as yields on state debt surged.
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