China

A Chinese conglomerate’s rescue plan for Britain’s second-biggest steelmaker has been met by doubts from unions and industry insiders who question the buyer’s motives and business logic, the Financial Times reported. Jingye Group, a privately owned Chinese group whose interests span hotels, property, tourism and chemicals alongside steelmaking, agreed to buy British Steel from the UK’s Insolvency Service.

China’s local governments face a record number of lawsuits for failing to pay their contractors as the country’s slowing economy puts a strain on public finances, the Financial Times reported. The financial outlook has deteriorated so markedly that analysts have warned that there is a risk of social unrest. Chinese courts have listed 831 local governments as being in default in the first 10 months of this year, compared with 100 in the whole of 2018.

China Minsheng Investment Group Corp. once sought to be the nation’s version of JPMorgan Chase & Co. Instead it’s the country’s biggest dollar bond defaulter this year, Bloomberg News reported. With $2 billion of debt maturing in 2020, the company is scrambling to raise cash. It’s slashed executive pay as much as 83% and is selling assets. One of the largest private investment companies in China, the group was set up by 59 non-state companies in 2014 with a mandate to help Chinese private enterprise expand globally.

China’s local governments are helping inject fresh capital into small lenders across the country, part of an expanding campaign to restore confidence in the world’s largest banking system, Bloomberg News reported. At least 10 small Chinese banks have raised money this year by selling shares packaged with non-performing loans, in several cases to buyers controlled by local authorities. In at least one deal, the NPLs were sold at above-market rates.

A small Chinese lender made a rare decision to skip early redemption on its local tier-two bond, sparking fresh concern on the country’s smaller lenders as non-performing loans rise amid an economic slowdown, Bloomberg News reported. Guangdong Nanyue Bank Co, based in the coastal province in Southeast China, said it won’t exercise an early redemption on its 1.5 billion yuan ($215 million) 6% tier-two bond next month, according to a filing on Thursday on the China Bond website. It didn’t give a reason for its move.

The Chinese company in pole position to save British Steel is aiming to strike a deal to take over the failed manufacturer by the middle of this month, according to people briefed on the situation, the Financial Times reported. Jingye Group has emerged as the frontrunner to buy the stricken steelmaker out of insolvency, following almost six months of uncertainty for 5,000 workers who are mostly based at the large Scunthorpe plant in Lincolnshire.

Policymakers in China trimmed a key benchmark lending rate for the first time in more than three years amid a protracted slowdown in the world’s second-biggest economy, prompting local stocks to nudge higher and bond yields to fall, the Financial Times reported. The People’s Bank of China, the country’s central bank, said in a statement on Tuesday that it was lowering the interest for the one-year medium-term lending facility by five basis points to 3.25 per cent, the first time it has cut since early 2016. It did not provide a reason for cutting the MLF.

Dagong, one of China’s biggest debt-rating agencies, said on Monday that it resumed its ratings business this month, after the operation was frozen for a year and after a shareholding restructuring that brought the company under state control, Reuters reported. “The company has fully restored credit rating business for non-financial corporate debt financing instruments in the interbank market, and securities credit rating business, since November,” Dagong said in a statement on its website www.dagongcredit.com.

It started with an unverified rumor from an obscure social media account: Yichuan Rural Commercial Bank was insolvent. Within hours of the post on Tuesday, more than 1,000 worried customers had lined up to withdraw their money, Bloomberg News reported. By Wednesday, a run on the bank had prompted local authorities to arrange more than 30 billion yuan ($4.3 billion) of liquidity injections. As branch staff sought to restore confidence, they displayed stacks of cash to convince depositors that there was enough to go around.

China’s Fosun Tourism Group said on Friday it would acquire the Thomas Cook and related hotel brands for 11 million pounds ($14.25 million), in a bid to expand its presence in the tourism business, Reuters reported. The assets include trademarks, domain names, software applications and licenses of the British travel firm and related hotel brands, Hong Kong-listed Fosun said, adding that it did not plan to buy overseas assets or businesses related to Thomas Cook for the time being.