SASAC says it will closely monitor shortterm bonds, maintain stability in market

The nation’s State asset manager sought to ease market worries about possible defaults, pledging on Wednesday to scrutinize bonds maturing within three months and saying a State- owned railway company has managed to avoid default.

In a bid to bolster confidence in Stateowned enterprises, the State- owned Asset Supervision and Administration Commission ( SASAC) said it will “further improve its dynamic system to monitor debt risks and will put bonds maturing over the next three months in the spotlight.”

The SASAC said it will “analyze such bonds one by one, make timely precautions and actively deal with risks, in order to prevent bond defaults and maintain the stability of China’s financial markets.”

It also said China Railway Materials Co had made full payments in time on 6.8 billion yuan ($ 1.02 billion) worth of bonds due this year, after the SASAC prompted the company to meet its obligations.

In April, China Railway Material suspended trade in 16.8 billion yuan worth of debt instruments as it becomes the first enterprise owned by China’s central government to encounter repayment difficulties.

China’s debt market has witnessed an increasing number of defaults over the past year as the economy slows, amid signs that the government is increasingly unwilling to bail out privately owned companies.

Regarding possible defaults by central government- controlled enterprises, SASAC said it has this year conducted checks on related debts on a regular basis, and it urged companies to deal with such risks properly.

Separately, China’s banking regulator has said the country will not open its treasury futures market to commercial banks in the near future due to concerns about a possible jump in volatility as the number of bond defaults grows.