SHANGHAI -- The problem of heavily indebted state-backed companies in China is starting to spook investors in global corporate bonds.
As liabilities balloon at Chinese civil engineering and construction companies engaged in public works projects to shore up the economy, premiums on foreign currency-denominated are rising. The bonds are under selling pressure because investors believe the Chinese government will no longer bail out state-owned enterprises. A sudden spike in defaults by big corporate borrowers in China could rattle global markets.
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