According to three in-house counsel and fund managers,
authorities must do more to improve China’s bond
trustee system to help mitigate default risks, despite other
measures in place designed to do so. The country’s
bond defaults shot up to $18 billion in 2019 and are expected
to surge in 2020 as the economy continues to slow down.
The current bond trustee system in China has a place in
serving the local role for local conditions but compared to
underwriting fees in other jurisdictions, they remain low and
some may even take on work for no fees. "It’s an
onerous role to be a bond trustee," said a fund manager at a
Chinese bank. "They are not paid a lot, but are obligated to do
The bond trustee system is one of the tools in place to
manage risks of defaults but is only currently used...