Even as Beijing pushes out new measures to stimulate its economy, China's growth slowdown will make it harder for the country's companies to pay their debts this year, ratings agencies say.
The Chinese government on Monday announced official GDP figures for last year that showed the world's second-largest economy expanded at its slowest pace in nearly three decades.
And while an annual growth rate of 6.6 percent is a figure most countries could only dream of, it marked a continued slide for Asia's largest economy. Slower growth can mean weaker profitability for indebted companies and increased risk for those holding their bonds.
"The economic chill in China is spreading, threatening to weaken profitability across nearly all sectors in corporate China," S&P Global Ratings said in a report Monday.
S&P added that it "believes debt-servicing capabilities will decline as demand cools and profit margins contract," while Beijing's ongoing efforts to reduce debt levels in the country may pause — or even reverse.
"While policymakers have intentionally steered the country toward a lower and more sustainable growth path, the broadness of the decline in recent months is raising concerns," the report said, adding that S&P expects corporate default rates to "rise modestly" this year.
According to S&P, China's onshore bond default rate hit an all-time high last year of more than 90 billion yuan ($13.3 billion).