A Chinese state-owned enterprise from the country’s remote north-west has failed to repay a US dollar bond in Hong Kong, the first offshore default in 20 years and the latest sign investors can no longer rely on Chinese authorities to bail out state groups.

A slowing Chinese economy and tight funding conditions for  weak borrowers— despite broader monetary easing in recent months by China’s central bank — are leading to  more defaults in both the onshore renminbi and offshore dollar markets. 

Various privately owned Chinese issuers have defaulted on offshore dollar bonds in recent years, including three so far this year. But while state-owned enterprises have  occasionally defaulted  on onshore bonds since 2015, offshore investors have still largely assumed that local governments would backstop their corporate entities.