China

Alibaba Group Holding Ltd. may get its cheapest dollar-denominated syndicated loan ever as it negotiates with banks to amend terms of its existing $4 billion borrowing, Bloomberg News reported. The Chinese Internet giant wants to cut the interest margin of the facility that it signed in May 2016 by 25 basis points to 85 basis points over Libor, said people familiar with the matter. That would be the cheapest rate ever for Alibaba, Bloomberg-compiled data show. It’s also the lowest margin among outstanding loans of local peers Tencent Holdings Ltd. and Baidu Inc, according to the data.

Dire warnings about the risks from China’s debt build-up have existed for nearly a decade though the crisis that many expect has yet to arrive. But with the world’s second-biggest economy growing at its weakest pace since 1990 and US tariffs adding pressure, investors are still nervous, the Financial Times reported. “Most countries that permit rapid credit expansions face financial crises or a sharp slowdown in the economy as risks in the financial system emerge,” says Logan Wright, director of China markets research at research provider Rhodium Group.

China’s most prominent development bank has been noticeably low-profile lately, a Bloomberg View reported. For the last decade, the 16 trillion yuan ($2.39 trillion) China Development Bank, and its less-muscular cousins Agricultural Development Bank of China Ltd. and Export-Import Bank of China, were on the forefront of every major stimulus push. In 2008, CDB financed the 4 trillion yuan spending pledge by the Ministry of Finance, its former controlling shareholder.

Many of the recent debates about Chinese takeovers and investments in Europe have been conducted in the opaque language of security. Spooks in Britain and Germany openly worry about the consequences of allowing Chinese groups such as Huawei into their 5G mobile networks. A recent delegation from Berlin even visited China to explore the intriguing idea of a no-spying pact.

Chinese developer Tahoe Group is seeking to offload a dozen projects that it bought for at least 40 billion yuan (US$5.97 billion) in the past two years, according to sources familiar with the matter, the South China Morning Post reported. It is the latest builder to resort to asset sales to raise cash in the face of mounting debts.

An economic slowdown and extremely tight credit conditions pushed corporate debt to a record high in China last year, according to experts, CNBC reported. Defaults for Chinese corporate bonds — issued in both U.S. dollars and the Chinese yuan — soared last year, according to numbers from two banks. Yuan-denominated debt rose to an “unprecedented” 119.6 billion yuan ($17.8 billion) — four times more than 2017, according to a February report by Singapore bank DBS.

Listed Chinese banks will need to raise about $260bn in fresh capital over the next three years as regulations force shadow-bank loans back on to balance sheets and global rules on systemically important groups impose extra requirements on the largest lenders, the Financial Times reported. A recent lending surge by Chinese banks in response to monetary stimulus designed to support China’s slowing economy is also adding to the banks’ capital needs, by accelerating the expansion of their balance sheets. China’s bank regulator has forcefully implemented the global Basel I

The "grey rhino" risks in China's financial sector are rising and regulators will step up efforts to control them, a senior official at the People's Bank of China said in remarks published on Monday. Chinese policymakers have warned of potential "grey rhino" events - highly obvious yet ignored threats - as the nation faces increasing uncertainties as the economy slows amid a trade war with the United States, the International New York Times reported on a Reuters story.

As China’s $9.1tn shadow lending industry cools for the first time in a decade, private corporate defaults are on the rise, the Financial Times reported. Shadow banking, an industry of loosely regulated, high-yield lending outside the formal banking sector, has attracted the wrath of the country’s financial watchdogs in recent years. Regulators launched an aggressive campaign against the sector starting in 2017.

China’s policy makers, faced with a slowing economy and growing pressure on the banking system, have decided it’s time for the nation’s stock and bond markets to play a bigger role in funding companies, Bloomberg News reported. Less than one-quarter of China’s $2.9 trillion of financing last year was from bond and equity issuance, central bank data compiled by Bloomberg show. That’s not good enough, according to senior officials, who are looking for ways to improve businesses’ access to cash without adding too much risk to the financial system.