Lingering housing slowdown has driven greater re-defaults in China's bond market, S&P Global Ratings said in a recent release.
About 40% of the country's restructured domestic bonds have re-defaulted since 2020, the rating agency said.
A third housing market downturn under the crisis catalyzed by China Evergrande Group's default may prompt increased re-defaults in 2027, S&P's Greater China country lead for corporates Charles Chang said.
Systemic risk concerns stemming from the crisis will worsen scenarios, especially with the added impact of the Iran conflict, Chang said.
Given these challenges, the government carried out directives against outright defaults, leading to zero offshore bond default rates and amounts for new defaulters for the year to date, S&P said.
However, declining default rates will further weigh on credit differentiation in the country's bond market and efficient credit allocation, according to Chang.