China

Credit Suisse Group AG was stung by the collapse of Luckin Coffee Inc. in China following an accounting scandal, which led to a five-fold increase in Asian loan-loss provisions, Bloomberg News reported. The Swiss bank set aside 97 million Swiss francs ($100 million) for soured loans, primarily related to three cases, the largest of which was Luckin Coffee, according to a person familiar with the matter. The bank only referred to a “Chinese food and beverage company” in its earnings statement Thursday.

Bad debt at Chinese banks climbed in the first quarter even as lenders deferred payments on and rolled over a combined 1.5 trillion yuan ($212 billion) in loans after the coronavirus outbreak brought the world’s second-largest economy to a standstill, Bloomberg News reported. After allowing banks to take a more lenient approach on how they classify bad debt, regulators in Beijing on Wednesday revealed the industry’s non-performing loan ratio nudged up just 0.06 percentage point to 2.04% at the end of March.

China’s painful economic shutdown was expected to have put the world’s second-largest bond market on course for a third straight record year of defaults. But it’s not panning out that way, Bloomberg News reported. The 30.4 billion yuan ($4.3 billion) worth of debt that’s gone sour so far this year in the $4.5 trillion onshore corporate bond market marks a sharp 21% drop from the pace in 2019, according to data compiled by Bloomberg.

The beleaguered HNA Group Co. has pulled off an escape from a domestic bond default after a hastily arranged creditor meeting that caused a stir in China’s investment community, Bloomberg News reported. The heavily indebted Chinese conglomerate said Wednesday it has garnered enough support from bondholders for a proposal to extend by one year the maturity of a 390 million yuan ($55 million) 7.1% note that originally comes due Wednesday, according to a company filing.

China’s $3 trillion trust industry, a key alternative source of funds for weaker companies, risks sending shock waves through the nation’s financial system with defaults among its investment products predicted to double this year under the strains of the coronavirus outbreak, Bloomberg News reported. The once fast-growing pocket of shadow banking in China has 5.4 trillion yuan ($766 billion) in trust offerings coming due this year, high-yield products backed by loans that are sold to banks, institutional investors and wealthy individuals.

Amid all China’s efforts to contain the economic damage of the coronavirus outbreak, a crucial development slipped by almost unnoticed -- the creation of the first national bad-debt asset manager in 20 years, Bloomberg News reported. Galaxy Asset Management Co. won approval in mid-March to convert into ​a financial asset management firm, gaining a much-coveted license to buy bad loans directly from banks nationwide, and the ability to borrow at relatively low rates.

Banks are under increased pressure to raise loan margins in the Greater China region as the coronavirus pandemic weakens lending and a global dollar liquidity squeeze pushes up funding costs, Bloomberg News reported. That’s a key takeaway from a Bloomberg survey of 15 major syndicated loan arrangers operating in the region, including international and Chinese banks. The survey was conducted between March 30 and April 1.

Swissport International AG, the airport ground services firm owned by beleaguered Chinese conglomerate HNA Group Co., hired advisers to review its debt as passenger air traffic grinds to a halt because of coronavirus restrictions, Bloomberg News reported. The company appointed Houlihan Lokey Inc. as financial adviser as it considers a restructuring of its 1.6 billion euros ($1.7 billion) of debt, according to people familiar with the matter who asked not to be identified because the appointment is private.

China Evergrande Group’s pledge to remake itself as a leaner company with a focus on controlled growth has been met with skepticism, with analysts concerned margins will suffer and others saying investors need more clarity, Bloomberg News reported. China’s most indebted developer unveiled a three-year plan on Tuesday titled ‘Growing Sales, Controlled Scale & Reduced Leverage’. The aggressive strategy includes cutting total debt load by 50%, boosting sales and trimming its land bank. Evergrande also Tuesday reported its first fall in annual profit in four years.

China’s industrial output contracted at the sharpest pace in 30 years in the first two months of the year as the fast spreading coronavirus and strict containment measures severely disrupted the world’s second-largest economy, data showed on Monday, Reuters reported. Urban investment and retail sales also fell sharply and for the first time on record, reinforcing views that the epidemic may have cut China’s economic growth in half in the first quarter.