Daily Memo: Risks of Debt Contagion in China

Defaults at state-owned enterprises are a warning to other distressed firms.

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Chinese corporate debt troubles. Two Chinese state-linked enterprises said Monday that they would not be able to meet upcoming onshore bond repayment obligations. Defaults at state-backed firms in China carry particularly high risks of contagion, as they signal to other distressed firms that a state rescue cannot be assumed. Indeed, at least 20 Chinese companies have reportedly suspended planned bond sales worth 15.5 billion yuan ($2.4 billion) over the past week. The nuclear option. In a recent interview, Saudi Foreign Minister Adel al-Jubeir said Saudi Arabia is considering nuclear armament in the event that Iran becomes a nuclear power, noting that “Iranians have only responded to pressure.” Japanese-Australian defense deal. Japanese Prime Minister Yoshihide Suga and his Australian counterpart, Scott Morrison, agreed in principle on a status of forces pact allowing for deeper military cooperation. The two countries are just scratching the surface on their burgeoning strategic relationship. Russo-Egyptian drills. The Russian and Egyptian navies started the annual joint exercises known as Friendship Bridge 2020, which will run from Nov. 17 to Nov. 24. U.S.-China truce? Singaporean Prime Minister Lee Hsien Loong on Monday called for the United States and China to develop a new bilateral framework “to develop the […]

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