China

A unit of HNA Group Co. sought more time to complete the arrangement of a second bridge loan it took to finance a luxury real-estate development in Hong Kong as the Chinese conglomerate juggles its borrowings following a debt-fueled acquisition spree, Bloomberg News reported. Hong Kong International Investment Group Co. needs “extra time” and the loan has been extended for six months through July 15, it said in an emailed statement on Monday.

The world's three largest credit-ratings companies have a bit of catching up to do. Eight high-yield developers listed in Hong Kong should now be investment grade, according to Bloomberg's default risk model, which uses market inputs such as debt outstanding, interest expenses and operating cash flow to calculate the probability of firms reneging on their obligations in the year ahead, Bloomberg News reported in a commentary. Bloomberg's default risk model shows that companies from Country Garden to CIFI Holdings deserve an investment-grade ranking.

Units of HNA Group Co. missed payments due to several Chinese banks in recent weeks, prompting three lenders to freeze some of the borrowers’ unused credit lines, people with knowledge of the matter said. As of Jan. 4, four of the banks still hadn’t collected on principal and interest payments owed late last year, said the people, who spoke on condition the lenders not be named because of the sensitivity of the matter, Bloomberg News reported. They declined to name the units or provide any details on the size of the missed payments. China Citic Bank Corp.

Bonds from China’s property developers face the biggest risk of default in the nation’s domestic debt market as the government’s funding curbs strain their finances, according to a survey of analysts and traders, Bloomberg News reported. Ten out of 15 respondents in a Bloomberg survey late December see some payment failures among developers this year. Most predict yield spreads on corporate bonds that surged to four-year highs in 2017 to climb more.

As authorities order an embattled tech entrepreneur back to China to handle his growing financial problems, a local court has seized his assets, the Wall Street Journal reported. LeEco Holdings founder Jia Yueting, whose company’s businesses include online video, electric cars and smartphones, was a rising star in China’s tech industry who aimed to take on Apple, Tesla and Netflix. He also invested in U.S. electric-car startup Faraday Future. But the company has been mired in credit woes and a cash crunch since the fall of 2016.

Profit growth at Chinese industrial firms slowed in November as producer prices rebound appeared to soften, Bloomberg News reported. Industrial profits rose 14.9 percent last month from a year earlier, compared with previously reported 25.1 percent in October, the statistics bureau said on today. Robust demand and consistent factory inflation have lifted profitability this year. That helps manufacturers pay off their debt and invest more as real corporate borrowing costs decline. Still, as factory-gate prices softens, profit growth may also be due to slow.

Sentiment in the Chinese bond market has worsened as investors digest the government’s latest message about reducing risk in the financial system, the Financial Times reported. After November’s treasury sell-off, corporate bond prices have fallen; the spread between five-year triple A-rated corporate paper and equivalent Ministry of Finance yields has widened to a three-year high. The sell-off has spread to riskier assets in the wake of the release of draft rules aimed at bringing order to China’s Rmb75tn ($11tn) universe of asset management products.

One of China's biggest state-run conglomerates has sued a Venezuelan counterpart in a U.S. court in a dispute over unpaid bills, a sign of Beijing's growing impatience with its socialist South American ally as it slides into bankruptcy, the International New York Times reported on an Associated Press story. In the lawsuit filed Nov. 27 in a Houston federal court, a U.S. subsidiary of Sinopec sought more than $23 million in damages from Venezuela's state-run oil company, PDVSA.

China’s main annual economic policy meeting is likely to set a slightly lower growth target for 2018, suggesting that deleveraging will be gradual and no "serious" property tightening measures are in the pipeline, Bloomberg News reported. That’s according to Wang Tao, head of China economic research at UBS Group AG in Hong Kong. She argues in a Dec. 5 note that policy makers won’t drop a numerical growth target altogether, though may set a range similar to this year’s at around 6.5 percent without repeating this year’s language that it should be higher if possible in practice.

One of China’s biggest state-owned oil companies is suing its Venezuelan counterpart in a US court, in a sign that Beijing’s patience over unpaid debts is running out as the Caribbean nation falls deeper into economic and social chaos, the Financial Times reported. A US subsidiary of Sinopec is suing PDVSA, the Venezuelan state oil company, for $23.7m plus punitive damages over a May 2012 contract to supply steel rebar for $43.5m, half of which it says remains unpaid, according to court documents seen by the Financial Times.