China may allow more bond failures with credit-default swap trading

Hong Kong

CHINA'S approval of credit-default swap (CDS) trading for the first time is fuelling speculation that the authorities will allow more bond delinquencies as the economy slows.

The People's Bank of China has approved rules governing CDS trading in the country, according to a statement from the National Association of Financial Market Institutional Investors, a unit under the central bank. The purpose is to help diversify credit risks and facilitate healthy development of the market, the statement said.