China’s first corporate debt default in at least 17 years has sparked fear that the country’s ‘Lehman moment’ is fast approaching, and Lombard Street Research says this is just the tip of the iceberg.
Shanghai Chaori Solar Energy Science & Technology failed to make an 89 million yuan ($14.5 million) interest payment on Friday. On Tuesday, another solar company announced a second year of net losses, leading some analysts to pinpoint the firm as the next domino to fall.
“The system is a house of cards that will collapse without change over the next few years,” Diana Choyleva, head of macroeconomic research at Lombard Street Research said in a note titled ‘China’s bond default: the tip of the iceberg.’
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