Troubled Chinese conglomerate HNA Group Co. faces a crucial test -- avoiding its first public bond default. Once a front-runner in China’s debt-fueled global spending spree, HNA is scheduled to repay a 1.3 billion yuan ($185 million) local bond Tuesday, Bloomberg News reported. Earlier this month, HNA said it would halt trading of this bond from Dec. 6 till its maturity due to an unspecified “major event that has yet to be finalized”. It didn’t give any details. The suspended bond last traded at 97.55 yuan on Dec. 5.
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These are perilous times for holders of Chinese corporate bonds. Record domestic defaults and the biggest dollar-debt delinquency by a state-owned company in two decades have jolted investors this year, underscoring the need for increased vigilance as the economy slows and Chinese policy makers scale back support for a slew of cash-strapped businesses, Bloomberg News reported. As bondholders adjust to a new -- and arguably more healthy -- environment where companies are allowed to default, these are some of the indicators they’re watching to avoid getting burned.
China’s economy started the decade in a boom and will end it suffering the worst slowdown since the early 1990s, Bloomberg News reported. What comes next? Bloomberg asked some of the world's most prominent China watchers, several of which distinguished themselves over the past 10 years with prescient forecasts or market-beating returns. Predictions of even slower economic growth were near unanimous among the group, though most respondents also said policy makers have the tools to avoid a crisis.
China’s sovereign-wealth fund is coming to the aid of a troubled lender in a 100 billion yuan ($14.28 billion) bailout, the latest show of government support for the banking sector, which has come under intensifying financial stress as the economy slows, The Wall Street Journal reported. Hengfeng Bank, based in eastern China’s Shandong Province, will sell 100 billion shares at a valuation of 1 yuan per share, almost all of them to government-backed investors, according to the bank and one of its backers.
The favored funding source of China’s real-estate developers is under scrutiny in one of the country’s largest urban areas, posing a threat to a sector that has stretched creative financing to its limits, the Wall Street Journal reported. On Friday, the city of Xi’an in central China opened a consultation process on instituting an escrow system that would ensure developers hold on to funds worth 1.2 times the cost of building a new property when booking a presale.
China has made developing its own chip industry a matter of patriotic pride. It helps that “China chip” and “China heart” sound the same in the local language. The strain of this 1.7 trillion yuan ($243 billion) endeavor may be too much for the debt-clogged arteries of its municipal governments, though, according to a Bloomberg News commentary. Over the past decade, Beijing hasn’t hesitated to deploy its fiscal might in pursuit of economic and social objectives.
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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, the Wall Street Journal reported. 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.
U.S. President Donald Trump signed off on a phase-one trade deal with China, averting the Dec. 15 introduction of a new wave of U.S. tariffs on about $160 billion of consumer goods from the Asian nation, Bloomberg News reported. The deal presented to Trump by trade advisers yesterday included a promise by the Chinese to buy more U.S. agricultural goods, according to the people. Officials also discussed possible reductions of existing duties on Chinese products, they said. The terms have been agreed but the legal text has not yet been finalized, the people said.
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China’s companies racked up some towering bills as they expanded, and the world’s investors and lenders rushed to offer them even more money. Now the bills are coming due, and a growing number of Chinese companies can’t pay up, in a sign that the world’s No. 2 economy is feeling the stress from its worst slowdown in nearly three decades, the New York Times reported.
Chinese leaders pledged stepped-up efforts to boost slowing growth, as they try to manage a downshift in a maturing economy and fallout from the trade war with the U.S., the Wall Street Journal reported. An economic blueprint, approved today by President Xi Jinping and other Chinese leaders at the end of an annual closed-door conclave, promised more fiscal and monetary measures with the aim of supporting everything from consumption to infrastructure investment and employment in the coming year—all to ensure that the growth rate will be kept stable.