China

Creditors of the main unit of Chinese solar panel maker Suntech Power Holdings Co Ltd on Tuesday approved a plan to restructure its $1.75 billion debts with proceeds from acquirer Hong Kong-listed Shunfeng Photovoltaic International Ltd., Reuters reported. Shunfeng announced this month it had agreed to take over indebted Wuxi Suntech Power Co Ltd for 3 billion yuan ($493 million), pending approvals from various parties including its own shareholders and Wuxi Suntech's creditors on the debt restructuring. Shunfeng has said it would use the proceeds to pay down Wuxi Suntech's debts.

Suntech Power Holdings Co., the Chinese maker of solar panels whose main unit is reorganizing in the Cayman Islands, told a Manhattan court that an involuntary bankruptcy petition against it in the U.S. could derail restructuring efforts, Bloomberg reported. The creditors seeking the U.S. bankruptcy are a “tiny minority,” holding only 0.27 percent of the company’s outstanding debt, Suntech said in papers filed yesterday seeking to have the case dismissed.

China's Suntech Power Holdings Co Ltd , once the world's largest maker of solar panels, filed for provisional liquidation, signaling that it may go out of business after years of steep declines in panel prices. Suntech's shares fell as much as 23 percent to $1.15 on the New York Stock Exchange on Wednesday. "We do think this is the end for Suntech," Raymond James analyst Ryan Berney told Reuters. Suntech filed for provisional liquidation in the Cayman Islands, where it is incorporated.

China’s swelling local-government debt is spurring speculation that authorities could sell some of their holdings of listed shares, estimated by UBS AG to total at least 5 trillion yuan ($820 billion), to make repayments, Bloomberg reported. Partial divestment of governments’ stakes in state-owned companies is one option to address the debt issue, said Yao Wei, China economist at Societe Generale SA in Hong Kong. Local governments have already made some sales over the past two years and repayment pressures mean that more are likely, said Chen Li, a Shanghai-based analyst at UBS.

China’s top four banks posted their biggest increase in soured loans since at least 2010 as a five-year credit spree left companies with excess manufacturing capacity and slower profit growth amid an economic slowdown. Nonperforming loans at Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd. rose 3.5 percent in the three months to Sept. 30 from June to a combined 329.4 billion yuan ($54 billion), according to data compiled by Bloomberg News based on third-quarter results. Profit rose to 209 billion yuan.

China's Shunfeng Photovoltaic International Ltd has signed a preliminary deal to buy the main China unit of Suntech Power, two sources close to the matter said, Reuters reported. The framework agreement with Wuxi Suntech's administrator brings the closely watched restructuring of the firm's $1.75 billion debt closer to completion after Suntech Power defaulted on a $541 million dollar convertible bond in March.

The Chinese government has room to deal with rising debt levels, which has become a “serious concern,” according to Zhu Min, a deputy managing director at the International Monetary Fund. While debt accumulation by companies and local government is “way too high,” the government has a lot of “policy buffer,” including $3.5 trillion foreign reserves, to resolve the problems, Zhu, a former deputy governor at People’s Bank of China, said at a panel during the IMF meeting in Washington yesterday.

Average new-home prices in 70 Chinese cities rose faster in August than at any time since January 2011 despite government measures to keep property prices in check, spurred by strong home-buying in major cities, The Wall Street Journal reported. It was the seventh straight month of price increases compared with year-earlier levels, data released Wednesday by the National Bureau of Statistics showed. Month-on-month price gains also picked up, after moderating for the previous four months, signaling limited impact of the government's tightening measures.

A Chinese government researcher estimates that China's practices of borrowing heavily to fuel investment-driven growth have as much as doubled local government debt in just two years to around 20 trillion yuan ($3.3 trillion). The researcher, Liu Yuhui of the Chinese Academy of Social Sciences, said the current dependence on heavy borrowings to drive rapid economic growth is unsustainable. "My point is that there has been a notable rise in the overall government debt level over the past two years," Mr.

Investors have made billions betting against economies in which debt is rising and home prices are soaring. They have had particular success targeting the banks that fund these booms. Right now, their target is China, The Wall Street Journal reported. Some compare China to the U.S. in 2007. Others cite Japan before the 1989 real-estate bust. China bulls acknowledge the risks but say the government has the money and expertise to defuse the problems.