China

Sainty Marine Corp., a shipbuilder based in the eastern Chinese city of Nanjing, plans to convert its capital into about 520 million new shares and swap some or all of them with debt as part of a revamp, Bloomberg News reported today. Creditors will get one equity share for about 13.72 yuan ($2.1) of Sainty’s debt under the restructuring, the company said in a draft plan to the Shenzhen stock exchange. Sainty Marine had more than 800 million yuan ($120 million) of loans overdue when trading in its shares was halted about a year ago.

Chinese regulators have pushed through the debt restructuring plan of a state-owned steel trader as the government gets set for a new round of debt cleanups, Bloomberg News reported today. Sinosteel Engineering & Technology Co. yesterday received a notice from its controlling holder Sinosteel Corp. that its parent’s plan had been approved with guidance from government agencies, according to a statement from the unit to the Shenzhen stock exchange. Beijing-based Sinosteel Corp.

While economists and many foreign investors fret about China’s spiralling debt and rising defaults, a small niche of alternative asset managers is braving the China credit space, attracted by high yields from borrowers shut out from other sources of finance, the Financial Times reported. Global banks have pulled back on cross-border lending to China, but some private debt funds are moving in to plug gaps in a domestic financial system still dominated by state-owned banks.

China’s economy is showing signs of stability, a welcome break for both investors and a leadership that has spent much of 2016 battling economic headwinds. But it is an engineered calm that comes at a cost, say economists, The Wall Street Journal reported. Over the past month, gauges such as industrial production and fixed-asset investment were surprisingly robust. Imports rose for the first time in nearly two years and strong property sales in large cities helped prop up demand for steel and cement. “The data is ticking along,” said Chris Weston, chief strategist at IG Markets Ltd.

The explosive growth of spending overseas by Chinese tourists dwarfs the increase in the number of Chinese traveling abroad. The most likely reason? Disguised capital outflows, Bloomberg News reported. So says former U.S. Treasury official Brad Setser, who drilled into the spending data provided by some of the most popular destinations for Chinese travelers.

According to the Chinese business publication Caixin, the first of China's massive state-owned organizations has collapsed under the weight of $2.2 billion worth of bad debt in China's interbank bond market. The company, Guangxi Nonferrous Metals Group, filed for bankruptcy nine months ago but only got approval from the Chinese government to go bankrupt a few days ago. This is different from other Chinese bankruptcies. It's the first company in China's superliquid, over-the-counter interbank market to go bust.

A court in southern China has formally declared bankrupt Guangxi Nonferrous Metals Group Co Ltd, an unlisted state-run metals producer that defaulted on a bond in February and missed a payment in April, Reuters reported. The firm, which is owned by the Guangxi regional government, had failed to propose a court-ordered reorganization plan within a six month window, the intermediate court in Guangxi's capital Nanning ruled on Sept. 12 according to a statement posted online on Monday. As such, the restructuring period was brought to a close and the company was declared bankrupt, it said.

China's listed property developers issued 960 billion yuan (110.8 billion pounds) in bonds as of Sept. 19, more than three times the amount in the same period last year, financial magazine Caixin reported, citing data from WIND, a Chinese financial data provider. "At this pace, there is no suspense that bond sales by property developers would reach over 1 trillion yuan ($149.91 billion) this year," the report said. The report attributed the rise to easier access, low interest rates, encouraging property policies and a lack of other investment channels.

The Chinese coastal city of Tianjin plans to issue corporate bonds to ease the debt burden of a local state-owned steelmaker — in a flagship case of restructuring in the domestic industry, the Financial Times reported. Tianjin’s city government has finalised a plan to restructure the Rmb192bn ($28.6bn) debt of Bohai Steel Group by placing its most profitable assets into a new company and converting a portion of the liabilities into bonds, according to Caixin, a respected financial magazine.

China’s debt has grown to alarming levels, according to new data from the Bank for International Settlements that highlight a big potential risk to the global economy, the Financial Times reported. What the BIS terms the country’s “credit gap” is now three times higher than the typical danger level, the research shows.