Chinese Corporate Debt Payments Overwhelm Revenue, But Don't Worry Says Moody's

For a lender, it is seldom a good idea to covet exposure to a corporate borrower where their debt payments are larger than total earnings, but that is the case many Chinese banks find themselves in, a Moody’s research note observes. Chinese corporate debt to earnings analysis, however, does not necessarily tell the full story, as Moody’s estimates there is a “low probability of a sudden spike in corporate defaults.”

One-fifth of Chinese corporates surveyed by Moody's have higher debt payments than revenue

Fully one-fifth of Chinese non-financial corporate debt covered in a recent Moody’s study had debt payments that were not covered by the...