The prices of bonds issued by China’s largest manager of distressed debt tumbled to record lows as global investor fears mounted over its financial health following the execution of its former chair for bribery.

Concerns surrounding state-owned Huarong Asset Management, a conglomerate with about Rmb1.7tn ($260bn) of assets and $22bn in outstanding offshore debt, have been growing since it said it would delay the release of its financial results at the start of April.

Lai Xiaomin, Huarong’s former chair, was executed in January after being found guilty of taking Rmb1.8bn in bribes over a 10-year period. The sell-off in the company’s bonds reflected uncertainty among investors, which include global fund managers, over assets that were originated during his leadership.

His execution represented a relatively rare instance of China applying the death penalty for financial crimes, which included abusing the power to allocate credit. Lai was arrested during his tenure in 2018 and convicted of other crimes including corruption and bigamy.

“No one really knows officially what the amount of these legacy assets [is],” said Harry Hu, senior director at S&P Global Ratings. He added that the company was believed to have made loans that were not in line with its business strategy.

Among those holding Huarong debt are BlackRock and Goldman Sachs Asset Management, with the latter having $116m of exposure as of late February to a $350m bond maturing in 2030, according to Bloomberg data. That security dropped 9 per cent to 77 cents on the dollar on Tuesday morning, while another $1.5bn perpetual bond fell 7 per cent to 81 cents on the dollar.

S&P on Friday issued a warning over Huarong’s credit profile, reflecting uncertainty stemming from the hold up in the release of its results. Huarong’s debt is rated investment grade by S&P.

Huarong has said the delay in its results was required so that an auditor could finalise a transaction, without providing specific details. Huarong’s Hong Kong-traded shares have been suspended at the group’s request since early April.

The company is majority-owned by China’s finance ministry. S&P believes there is a “very high likelihood” that Huarong has benefited from “extraordinary government support”, which has helped it borrow at low yields on international markets. In 2015, it launched an initial public offering in Hong Kong following strategic investments by foreign investors including Warburg Pincus and Goldman Sachs.

Huarong was the latest in a line of Chinese companies to come under pressure in dollar bond markets. In March, China Fortune Land Development, a property developer, defaulted on $530m of bonds in which BlackRock and HSBC were investors.

Huarong, along with three of China’s other big distressed debt managers, was set up in the response to the Asian financial crisis of the late 1990s. It originally handled the bad debts of Chinese state-owned lender ICBC, but in recent years transitioned to a more commercial model and acquired financial businesses in addition to its portfolio of loans.

Additional reporting by Hudson Lockett in Hong Kong and Sherry Fei Ju in Beijing