China

New loans in China dipped last month as growth in total financing slowed, signalling a more measured increase in credit and tighter conditions for shadow financing after a record jump in new lending in January, the Financial Times reported. New renminbi loans totalled Rmb839.3bn ($132.2bn) in February, according to the People’s Bank of China - down from a record Rmb2.9tn in January, when loan officers’ annual lending quotas reset and local governments leaned on banks for loans as they awaited their own quotas for bond sales.

The rapidity and size of China’s debt boom in the past decade has been almost entirely without precedent. The few precedents that do exist — Japan in the 1980s, the US in the 1920s — are not encouraging, the Financial Times reported. Most coverage has rightly focused on China’s corporate sector, particularly the debts that state-owned enterprises owe to the big four state-owned banks. After all, these liabilities constitute the biggest bulk of the total debt outstanding, and also explain most of the total growth in Chinese debt since the mid-2000s.

Debt-laden Chinese conglomerate HNA Group Co. has given its creditors cause for concern in recent months, but its international bondholders are finding some comfort in guarantees provided by the local parent company. The structure means that overseas investors would in theory have a direct claim against the Chinese-based entity in the event of any default or bankruptcy proceeding, Bloomberg News reported.

When the China Insurance Regulatory Commission announced last week that it was seizing Anbang Insurance Group Co., the only surprise was that it took so long, a Bloomberg View reported. Last year, the company was told to sell its overseas assets, its founder was placed behind bars, and banks were ordered to stop offering its products. So what, if anything, does this latest incident tell us about China's economy and its attempt to crack down on debt? Anbang is often referred to as an insurance company, but this is misleading.

HNA Group, the heavily leveraged Chinese conglomerate, has turned to private equity company Pacific Alliance Group for finance amid pressure to raise cash and cut its debt, the Financial Times reported. Hainan-based HNA, which started as an airline company before expanding into finance, announced on Wednesday that it had pledged about 1.4bn of shares — amounting to HK$3.1bn ($396m) — from one of its subsidiaries, to borrow from privately owned PAG Holdings.

S&P Global Ratings stepped up its scrutiny of HNA Group Co. by cutting its credit assessment for the second time in less than three months as the debt-laden Chinese conglomerate renewed a defense of its "very healthy" finances, Bloomberg News reported. Late Tuesday, S&P said it lowered HNA’s unofficial credit score by two notches to ccc+, or seven levels deep into junk territory, citing the group’s deteriorating liquidity profile.

Chinese deal makers that racked up debts for overseas deals and are now reversing course to pay down borrowings have attracted the attention of restructuring specialists, Bloomberg News reported. As President Xi Jinping steps up leverage curbs, borrowing costs in China have jumped. The nation’s most high-profile deal makers including HNA Group Co. have come under mounting regulatory scrutiny, and have been selling assets as they try to rein in borrowings.

Companies controlled by Chinese local governments have avoided defaulting on their bonds so far. They will not continue to be so lucky, the Financial Times reported. Officials are taking a regulatory axe to the implicit supports that have allowed hundreds of local government financing vehicles to stagger on.

Wall Street bankers gorged on fees from HNA Group Co. as they helped the debt-laden Chinese conglomerate clinch $55 billion of acquisitions around the world. They’re set for another bonanza as the company offloads some of those same purchases to stave off a liquidity crisis, Bloomberg News reported. HNA doled out as much as $200 million in advisory fees during a three-year investment spree, according to Freeman & Co.

S&P Global Inc. plans to offer its ratings services in the Chinese domestic bond market, with an eye on buying a majority stake in a local agency or setting up a new entity there to do so, its chief financial officer said. The world’s largest credit rater’s plan to assess the yuan-denominated bonds of Chinese firms follows the People’s Bank of China’s decision last year to allow international ratings companies to set up their own businesses in the nation, according to CFO Ewout Steenbergen, Bloomberg News reported.