BEIJING: The vice mayor of Tianjin told financial institutions on Tuesday (Jun 22) he expected no additional state companies to default in the northern Chinese city and promised to maintain a healthy credit environment, three sources told Reuters.
Since late 2020, several defaults by state firms including Yongcheng Coal & Electricity Holding Group, Tsinghua Unigroup and automaker Huachen Automotive Group have eroded investor confidence, pushing up corporate funding costs.
"Companies are not lacking in profitable projects, and the market is not lacking in capital," Tianjin's vice mayor Kang Yi told a gathering of financial institutions, the sources said.
"If market confidence remains weak, both investors and companies will suffer badly," he said.
Underscoring weak investor confidence, net bond financing by Tianjin-based state companies was negative 82.4 billion yuan (US$12.73 billion) in the first five months, and debts issued were mostly short term.
Kang told investors the darkest period was past and the city government would do its best to protect investor interest, the sources said.
"The message to the market is: with government backing, there's nothing to fear," said one of the sources, who asked not be name because they were not authorised to speak to the media.
The meeting's participants included officials from the state asset regulator, China's securities watchdog and China's financial market association, the sources said.