Infrastructure REITs and the default risk of SOEs in China

State-owned enterprises (SOEs) play an important role in China’s infrastructure-based real estate investment trusts (REITs) pilot. This study summarises the characteristics of the nascent REIT regime and examines the impact of REIT-related financing on default risk among SOEs focused on infrastructure investments. It utilises the expected default frequency (EDF) based on the KMV model to measure the default risk. A panel model and propensity score-matching difference-in-differences method (PSM-DID) are employed for empirical analysis. The results show that issuing REITs could heighten SOEs’ short-term default risk due to overinvestment and a reduction in mature assets. Additionally, motivation behind SOEs issuing REITs and other potential risks in establishing a new market segment are discussed. This study provides valuable insights for SOEs issuing REITs for infrastructure investments and contributes to the research on sustainable development of SOEs and infrastructure.