China Considers New Holding Company for Huarong, Bad-Debt Managers
Bloomberg News, 01 June 2021
China’s finance ministry is considering a proposal to transfer its shares in China Huarong Asset Management Co. and three other bad-debt managers to a new holding company modeled after the one that owns the government’s stakes in state-run banks, according to a person familiar with the matter.
Policy makers are re-examining the proposal, which was first tabled three years ago, as part of discussions on how to deal with the financial risks posed by Huarong, said the person, who asked not to be identified discussing private information.
Some officials view the creation of a holding company as a step toward separating the government’s roles as a regulator and shareholder, streamlining oversight and instilling a more professional management culture at Huarong and its peers, the person said. Continue reading “Article: China Considers New Holding Company for Huarong, Bad-Debt Managers”
China Huarong Asset Management Co. made the biggest bond payment since confidence in its financial health began plunging two months ago, adding to signs that the company still has access to near-term liquidity.
What happens when a company set up by the Chinese government to help clean up toxic debt in the country’s banking system gets into trouble itself? We’re finding out now. Investors were spooked in April after China Huarong Asset Management Co., one of the country’s biggest distressed asset managers, failed to release financial statements in the wake of the execution of its former top executive for bribery. That raised questions about its financial health — and broader worries about whether China would let an institution backed by the central government fail. The ending of a presumed safety net that’s long been priced into Chinese bond values would mean a seismic shift for investors across emerging markets. 