Mubasher: Defaults for Chinese corporate bonds hit a record high last year on the back of global economic slowdown and extremely tight credit conditions, a news report said.

Defaults for Chinese company bonds, issued in both US dollars and Chinese yuan (CNY), climbed last year, CNBC said, citing figures from two banks.

Yuan-denominated debt jumped to an “unprecedented” CNY 119.6 billion ($17.8 billion) last year, surging four times more than 2017, the news agency cited Singapore bank DBS’s February report.

“China witnessed an unprecedented wave of corporate bond defaults last year, in a fresh sign of wobbles hitting financial markets as slowdown deepens,” DBS analysts said in the report.

The size of defaults in onshore yuan-denominated bonds was estimated at CNY 159.7 billion last year, which is roughly four times more than estimated in 2017, according to Japanese bank Nomura’s data.

Offshore corporate dollar bonds issued by Chinese companies followed the same trend.

US dollar-denominated debt climbed to $7 billion last year, from zero last year.

The energy firms bailed on CNY 46.4 billion of payments last year, accounting for nearly 40% in yuan-denominated debt, while consumer companies were the next to take the worst hit, DBS said.

While the default would continue through this year, the outlook seemed negative, given the reduced risk appetite and huge maturing volume” DBS said, noting that corporate bonds due this year amount to CNY 3.5 trillion.

“A worryingly large share of recent borrowing has come in the form of short-term bonds,” the bank said.

The sluggish housing figures exacerbated the funding pressure faced by property developers, it added.