People's Bank of China (PBOC) said today:
- Risk in the bond market were generally controllable.
- The default rate was not high, but a financial risk monitoring unit was established to monitor domestic and international risks and stabilize market expectations.
- Liquidity in the markets was reasonable and stable.
The three-year debt reduction process has made progress but has pushed borrowing costs higher and tightened credit seen as a factor in some private defaults and hampered local government investment.
As of early June, 12 companies defaulted on repayment of principal or interest on 19 bonds with a total value of 17.4 billion yuan this year. At the end of May, the value of troubled corporate bonds that failed to repay was about 66.3 billion yuan. According to the People's Bank of China statement, stable and neutral monetary policy has achieved fairly good results.
