China's bond market has a forgery problem

The bond market is under pressure as at least 29 bonds defaulted in 2016, up from seven in 2015

Forged seals, fake letters, and counterfeit documents. They’re all part of a recent spate of fraud in China that’s added to worries about the country’s $3 trillion corporate bond market, where defaults have been rising and companies are finding it increasingly difficult to sell debt issues.

Within two weeks in December, two cases emerged that shook the market. China Guangfa Bank said documents and seals in its name had been forged for use on a letter that supposedly guaranteed the bond payments of another company, which wasn’t implicated. The bonds had defaulted. The debt was “a junk bond sold to individual