The defaults, including one on a 1 billion yuan ($150 million) bond from state-owned Yongcheng Coal & Electricity Holding Group based in Henan province this month, have sent shockwaves through China's $4.4 trillion market for non-financial corporate bonds.
In particular, confidence in bonds issued by state firms from provinces with weaker finances or a similar investment profile like coal-rich Shanxi have been hard hit.
Wang Yixin, Shanxi's deputy governor, told a Nov. 18 meeting of financial institutions "there's absolutely no problem" with near-term bond repayments.
"It's naturally right and proper to repay money after borrowing. It's in the genes of Shanxi businessmen," Wang was quoted as saying in a Shanxi government release.
Wang also vowed the local government would "safeguard Shanxi's reputation in the way we protect our eyes", adding that he thought recent SOE defaults were extreme individual cases.
His remarks follow a Nov. 14 letter from Shanxi's state asset management company to creditors, according to local media. Shanxi SOEs were strong enough to ensure there would not be a single default when bonds mature and the local government asked creditors for their continued support, the letter was reported as saying.
This month, a growing number of Shanxi SOEs, including energy producer Jinneng Group and Shanxi Coal Import & Export Group, have canceled bond sales citing market volatility.
Shanxi kicked off reforms this year to reduce its heavy reliance on coal mining, and diversify into emerging industries, part of a national campaign to restructure the state sector.
Shanxi's comforting message didn't appear to have an immediate market impact. On Thursday, an index tracking medium-term interbank notes extended its four-day losing streak, falling to the lowest level in two weeks.
($1 = 6.5630 Chinese yuan)
(This story corrects day in last paragraph to Thursday, from Friday)
(Reporting by Samuel Shen and Andrew Galbraith; Editing by Edwina Gibbs and Lincoln Feast.)