China

China’s ever-growing money market funds pose an increasing problem for the nation’s central bank as policy makers attempt to boost the flow of credit to cushion an economic slowdown, Bloomberg News reported. While the funds have offered savers a handy alternative to risky stocks and once high-flying wealth management products, they’re effectively raising borrowing costs.

China agreed to several small oil deals with Venezuela this week but gave no public confirmation that it would extend more loans to the cash-strapped country during a rare visit by President Nicolás Maduro to Beijing. Venezuela faces a stiff payments schedule over the next two months of about $2bn to bondholders, some of whom have debt secured against US-based refiner Citgo, and in compensation to western oil companies for past nationalisations in Venezuela.

Chinese companies’ debt-servicing firepower has slumped to a three-year low even as authorities move to support their financing, showcasing the difficulty of getting stimulus through to the real economy, Bloomberg News reported. Listed nonfinancial companies had cash and equivalents to cover only 81 percent of debt due in the coming year, the worst since 2015 -- when China was battling hard-landing fears -- data compiled by Bloomberg show. Materials, utilities and energy sectors are particularly vulnerable as their cash levels were at about half of short-term obligations.

Chinese aviation-to-finance conglomerate HNA defaulted on a Rmb300m ($44m) loan raised through a trust company, the lender said on Thursday as it sought to freeze HNA assets, the Financial Times reported. The announcement by Hunan Trust is a sign that HNA’s liquidity woes are beginning to have a broader impact outside China’s formal banking sector. The company is already under strict supervision by a group of bank creditors, led by China Development Bank, following a liquidity crunch in the final quarter of last year.

China agreed to extend a $5 billion credit line to cash-strapped Venezuela, said the Venezuelan finance minister, as President Nicolas Maduro headed to Beijing. Minister Simon Zerpa told Bloomberg News that Venezuela would pay back the loan with either cash or oil, Bloomberg News reported. The countries were expected to sign what Zerpa described as a strategic alliance on gold mining. “Venezuela has a great alliance with China,” Zerpa said on Thursday.

Rating agency S&P has downgraded seven Chinese local-government financing vehicles (LGFVs), on the view that local governments are less likely to provide bailouts if these companies verge towards default, highlighting the punishing impact of Beijing’s austerity campaign, the Financial Times reported. For the last decade, Chinese local governments have used such off-budget vehicles to finance infrastructure projects that skirt restrictions on direct borrowing, prompting warnings from global watchdogs and China’s finance ministry. In 2014, China’s parliament legalised dire

China’s policy makers are stuck with the most bearish equity market in years as their attempts to lift sentiment fail to gain traction, Reuters reported. The Shanghai Composite Index slid Wednesday to within 10 points of its lowest intraday level since 2014, ignoring an article in the Securities Daily expressing support for the market and suggesting value investors should start buying. The benchmark made a brief upward foray mid-morning and then retreated. It was down 0.3 percent as of 11:05 a.m.

African leaders attending this week's summit with China don't think that cooperation between the continent and Beijing has added to their debt burden, the Chinese government's top diplomat said on Thursday. Chinese President Xi Jinping pledged $60 billion (46 billion pounds) to African nations at Monday's opening of a China-Africa forum on cooperation, matching the size of funds offered at the last summit in Johannesburg in 2015, the International New York Times reported on a Reuters story.

S&P Global Inc. is developing a custom credit-rating scale for China that will likely mean more triple-A’s, worrying investors about inflated grades, The Wall Street Journal reported. The credit-rating company, which is setting up an independent business in China, recently said it will tailor a system for rating bonds from businesses, local governments and other issuers there.

China has agreed to restructure some of Ethiopia’s debt, including a loan for a $4 billion railway linking its capital Addis Ababa with neighbouring Djibouti, Ethiopia’s Prime Minister Abiy Ahmed said on Thursday. Abiy described the rescheduling as limited, but added that repayment of the railway debt has been extended by 20 years, Reuters reported. Landlocked Ethiopia and the Red Sea state inaugurated the railway in January, with 70 percent of the total cost covered through a loan from the Export-Import Bank of China (EXIM).