Troubled Peking University Founder Group Corp’s (PUFG) administrator is not recognising the keepwell deed the Chinese conglomerate provided for a $300 million dollar bond issued by Nuoxi Capital, financial intelligence provider Redd reported, Reuters reoprted. Keepwell deeds are used by some Chinese companies to facilitate offshore bond sales by their subsidiaries. The deeds are similar, according to lawyers, to “letters of support” where the issuer would be backed by an onshore company, but they stopped short of guaranteeing the debt.

China’s fragile economic recovery is ushering in a dangerous new phase for the nation’s $4.1 trillion corporate bond market, Bloomberg News reported. With the economy now strong enough for policy makers to dial back financial support but still too weak to save the most distressed borrowers, some fund managers are bracing for defaults on domestic Chinese debt to hit record highs this year. Delinquencies have already started rising after a remarkably quiet second quarter, and pressure on borrowers is set to grow as 3.65 trillion yuan ($529 billion) of notes mature by year-end.

Fosun International Ltd. is poised to lose its 20% stake in Cirque du Soleil Entertainment Group, the latest in a series of failed overseas deals for the Shanghai-based insurance, health care and tourism conglomerate, Bloomberg News reported. A consortium of Montreal-based Cirque du Soleil creditors is set to take control of the struggling circus operator, people familiar with the matter said. The company filed for bankruptcy protection in June as the Covid-19 pandemic slammed its distinctive global chain of musical, acrobatic shows.

There’s mounting scrutiny over the state-owned parent of BMW AG’s joint venture partner in China, Brilliance Auto Group Holdings Co. Investors are increasingly concerned about the Liaoning-based firm’s capacity to juggle its debt load as the pandemic weighs on profits, Bloomberg News reported. Concern is growing about the financial health of Brilliance Auto, the parent of Hong Kong-listed Brilliance China Automotive Holdings Ltd., which manufactures vehicles with the German carmaker in China via a joint venture.

New regulations issued by China’s financial authorities may help to smooth the resolution of bond defaults and exchanges and to improve transparency surrounding the bond-exchange process, but the effectiveness of the changes will ultimately depend on how they are implemented in practice, says Fitch Ratings. The Shanghai and Shenzhen stock exchanges, under the supervision of the China Securities Regulatory Commission (CSRC), released formal rules on corporate bond exchanges on 30 July, Fitch Ratings reported.

China’s multi-year clampdown on its peer-to-peer lending industry has whittled the number to just 29 platforms, down from about 6,000 at its peak, according to the nation’s top banking regulator, Bloomberg News reported. The crackdown, which is likely to be completed at the end of this year, has left investors with more than 800 billion yuan ($115 billion) in unpaid debt from failed platforms, Guo Shuqing, chairman of the China Banking Regulatory Commission, said on China Central Television on Friday. Regulators, together with the police, will try their best to recoup the money, he said.

Lenders to the world’s biggest airport baggage-handling group Swissport have offered a rescue package that would restructure its €2.1 billion of net debt and could transfer ownership to them from struggling Chinese conglomerate HNA Group, The Irish Times  reported. The owners of €1.4 billion of senior secured bonds issued by Swissport have promised to invest in the business to help it survive the pandemic, which has hit its operations hard with the grounding of flights.

Banks and financing platforms are being swept along as punters look for quick cash to bet on the world’s most volatile equity market. It’s a dangerous strategy both for already overextended households as well as lenders, one that’s drawing closer scrutiny from regulators, Bloomberg News reported. Authorities are also partly to blame. With the economy reeling from the pandemic, policy makers have pumped out liquidity and eased curbs on shadow banking to backstop small businesses and struggling families.

The former head of China's securities regulator has raised concern about banks addressing funding shortages by ramping up issues of short-term interbank debt instruments that have in the past attracted regulatory scrutiny, the International New York Times reported on a Reuters story. Xiao Gang, former chairman of the China Securities Regulatory Commission, said that against the background of a large increase in bank credit, banks faced an "arduous task" of making up for cash shortfalls for maturing old products.

China’s central bank has announced the first bankruptcy of a commercial bank in nearly two decades, authorising the liquidation of regional lender Baoshang Bank, a year after it seized control of the institution, the Financial Times reported.