China's mountain of maturing debt puts a fear that nobody's talking about

For all the talk of China’s mountain of debt, defaults and deleveraging, there’s a chasm nobody is talking about. Here’s an alarming and frequently cited statistic: Chinese industrial companies have at least $124 billion of debt maturing over the next two years. Actually, it’s worse. 

They have another $34 billion of bonds with put options – giving creditors the right to sell back their securities or get a higher coupon – that can be exercised within the next two years. Lenders could be asking for their money back much sooner than companies and investors expect. Whether bondholders cash in is anyone’s guess. But they have an incentive to do so, given rising market rates. For borrowers, puts effectively bring forward the maturity date: In July-September this year, about $3 billion of such options can be exercised for the first time on debt that’s due two years later, in 2020.