A commodity trader has become China’s first state-owned enterprise to inflict losses on dollar bondholders in two decades, according to S&P Global Ratings, a new landmark in a rising wave of defaults.

Chinese authorities are allowing more companies to renege on their debts, where once they would have found ways to engineer bailouts. So far defaults have mostly been concentrated in credit-starved private companies, but even some groups with state backing are now failing to repay creditors as promised.

The shift comes as Chinese growth slows to multidecade lows. Despite progress this week on a U.S.-China trade deal, the slowdown has heaped pressure on shakier companies after years of rampant corporate borrowing. Meanwhile, the local governments that back many enterprises are struggling, as their income from taxes and land sales declines.

Officials also want to curb moral hazard, or risky bets made in the belief that another party, such as the government, will foot the bill if things go wrong. In time that should lead to more efficient markets, where investors make clearer distinctions between different levels of credit risk, rather than relying on blithe assumptions of state support.

This week Tewoo Group Co., a commodity trader owned by the municipal government of the northern city of Tianjin, completed a debt swap with holders of four dollar bonds totaling $1.25 billion, according to a notice by the agent handling the deal.