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Ying Haifeng, President of Dagong International: China's bond market defaults will become normal and default rates will drop
2020-11-18 12:31 Reporter: Zhu Yueyi Editor: Yue Caizhou
Ying Haifeng said that the relative increase in the scale of defaults with the expansion of the entire bond market is reasonable, and the overall default rate is expected to decline.
On November 18th, under the guidance of the Insurance Asset Management Association of China and sponsored by Dagong International Credit Rating Co., Ltd., the "Real Economy Development and Bond Rating Forum under the Dual Cycle Pattern" was held in Beijing. Ying Haifeng, deputy secretary of the party committee and president of Dagong International Credit Rating Co., Ltd., pointed out in his speech that the Chinese bond market will show the characteristics of normalization of defaults but a decline in default rates in the next development.
Ying Haifeng said that the relative increase in the scale of defaults with the expansion of the entire bond market is reasonable, and the overall default rate is expected to decline. First, because the global and Chinese economies will resume growth, the actual default rate of all industries will decline in the process of economic development. Second, because of the special epidemic environment this year, global central banks have released excess liquidity. The development of all walks of life provides a good funding environment.
In addition to the normalization of defaults and the decline in default rates, Ying Haifeng said that looking forward to 2021, China's bond market will also show several development characteristics: volume and price return, and the growth rate will narrow; bond market interest rates will show a stalemate; The structure of bond varieties gradually shifted to innovative varieties.
Recently, the risk event represented by the breach of contract by Yongcheng Coal and Electricity Holding Group Co., Ltd. ("Yongmei Group") has attracted widespread market attention. When analyzing the changes in China’s debt market in 2020, Ying Haifeng mentioned that since 2014, the Chinese bond market has broken the redemption, and bond defaults have accelerated. The default peak will be reached from 2018 to 2019. In the first three quarters of 2020, the bond market defaulted on bonds96 Only, there were 18 new default issuers, all of which were down compared with the same period last year, and the default rate showed a downward trend. In addition, more positively, the default handling is more legal and market-oriented, and the bond risks of normalization, standardization and marketization The resolution mechanism is gradually being established.
Ying Haifeng also mentioned in his speech that the entry of foreign rating agencies such as Standard & Poor's and Moody's into the Chinese market and the entry of Internet companies into the rating market will intensify the industry's competitive landscape and may prompt the industry to accelerate the reshuffle. He also said that while the competitive landscape is intensifying, rating agencies are also facing huge market opportunities, and mentioned that opening up to the outside world brings new market opportunities to the rating industry.
"In the global rating market, Chinese rating agencies do not yet have the right to speak. In our market research, we found that Chinese companies need to understand overseas markets when going global, and overseas markets also need to understand the credit status of these Chinese companies. At the same time, Vietnam More and more overseas companies, especially the lesser-known overseas financial institutions, hope to let the Chinese market understand their real situation through rating agencies and share the great opportunities of China's development. This is a possible opportunity for the internationalization of China's rating industry." Haifeng Ying said.
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