China

Chinese bondholders facing the prospect of a debt default by a state-owned enterprise will receive a bailout, the company said on Tuesday, a sign that Beijing remains unwilling to impose market discipline on lossmaking state groups, the Financial Times reported. China National Erzhong Group, a unit of one of the elite club of 112 big enterprises directly owned by the central government, employed a workforce of more than 13,000 in 2012, when it had assets of Rmb25bn ($3.9bn).

For decades, an army of migrant workers drove China’s boom times, flocking to its cities to sew T-shirts, assemble iPhones, or build apartment blocks and Olympic stadiums, The Wall Street Journal reported. The arrangement helped millions of poor, rural Chinese join a new consumer class, though many also paid a heavy price. Now, many migrant workers struggle to find their footing in a downshifting economy. As factories run out of money and construction projects turn idle across China, there has been a rise in the last thing Beijing wants to see: unrest.

Local financing networks are unravelling across China as the economic slowdown bites into one of the weakest but most enduring links in the financial system — pulling hundreds of thousands of investors down with it, the Financial Times reported. These networks flourished as long as sentiment was high and rapid economic growth persisted. Now, however, investors are taking to the streets across the country as they seek to recoup their losses. Money ploughed into financing schemes that went bust in 2014 amounted to more than Rmb100bn ($16bn).

Baoding Tianwei Group Co. and three of its business units are filing for bankruptcy, five months after the maker of electrical transformers became the first state-owned Chinese company to default on an onshore bond, Bloomberg News reported. Tianwei and its units are insolvent and cannot pay their debts, the company said in a statement posted on Chinamoney.com.cn, a website of the China Foreign Exchange Trade System. Tianwei said it plans to meet its backers to discuss the bankruptcy.

With its market dominance, banking talent, global ambition and sterling political connections, Citic Securities fancied itself the Goldman Sachs of China, the International New York Times reported. Citic Securities, the brokerage arm of the biggest state-owned financial conglomerate, rode China’s stock market boom and a surge in corporate borrowing. The company’s stock price tripled in six months.

The view that China is growing far slower than official figures show is increasingly going mainstream, with big global investors among those now basing decisions on a rate of about 5 per cent, the Financial Times reported. According to government statistics China’s economy grew at an annual pace of 7 per cent in the second quarter of this year, in line with Beijing’s target for the year and the World Bank estimate of 7.1 per cent.

China National Erzhong Group Co. may miss an interest payment later this month after one of its creditors filed a restructuring request, putting it at risk of becoming the second state-owned company to default in the nation’s onshore bond market, Bloomberg News reported today. The smelting-equipment maker might not be able to pay a coupon that’s due Sept. 28 on its 1 billion yuan ($157 million) of 5.65 percent 2017 notes if a local court accepts the creditor’s restructuring application before that date, according to a statement posted on Chinamoney.com.cn.

Benjamin Wey was arrested by the FBI at his Manhattan home on Thursday and charged him with securities fraud, wire fraud, conspiracy and money laundering in an eight-count indictment unsealed in a federal court in Manhattan, the New York Times reported on Friday.

China's yuan shot higher in offshore markets on Thursday on suspected rare intervention by Chinese state banks that was seen as a bold gesture by authorities to shake out speculators betting against the currency. The intervention caught the market wrong-footed and catapulted the yuan more than 1 percent higher, putting the offshore rate on track for its biggest daily gain on record. Investors have been positioning for yuan depreciation since a shock devaluation of the currency in August, which sparked fears the economy was slowing down more than expected.

The wave of defaults and debt restructuring hurting oil bonds around the world looks set to reach China, Bloomberg News reported. Notes of oil services firms are the nation’s worst performers this quarter with a 5.9 percent slide amid record industry debt and slumping crude prices, according to a Bank of America Merrill Lynch index of foreign-currency notes. Explorers have lost 1.4 percent. Some private-sector companies have dropped to distressed levels with the 2019 notes of Honghua Group Ltd. at 38.8 cents on the dollar and Anton Oilfield Services Group’s 2018 paper at 43.8 cents.