Currently, China's total loan to GDP is at about 220% and a number of state-owned enterprises and central enterprises are at the verge of default.

ANBOUND’s research team is of the view that defaults by state-owned enterprises are beneficial to the long-term development of China’s debt market and it helps to shatter the long-standing notion of 'rigid repayment’.

However, it is evident that the bond market is troubled with the inadequacy in risk assessment mechanism, information disclosure mechanism and investor protection mechanism

It will be increasingly difficult for the state-owned enterprises to issue bond and the liquidity risk and default risk are higher.