Chinese bad debt manager Huarong to be bailed out by state-owned enterprises
China’s top distressed asset manager said he would record a massive loss and expects to receive a capital injection from public financial institutions, averting a default that would have had far-reaching repercussions on Asian credit markets .
China Huarong Asset Management Co., majority-owned by China’s Ministry of Finance and the country’s largest manager of NPLs and other bad debts, also said it has no plans to restructure its debt. , cementing investor belief that many Chinese institutions are too big to fail.
On Wednesday evening, the company said it expects to post a net loss equivalent to around $ 16 billion for 2020. Earlier this year, the company’s delay in reporting its results spooked international investors and caused prices to plummet. price of its bonds.
The Beijing-based company blamed its past over-expansion and other problems on former President Lai Xiaomin, who was executed after a court found him guilty of bribery and embezzlement. He also said the coronavirus pandemic and its negative impact on the markets caused some of its assets to deteriorate rapidly.
Huarong said five state-owned financial companies, including Citic Group, another bad debt manager China Cinda Asset Management and an investment unit of China Life Insurance Co., signed an agreement to buy newly issued shares, without however specify how much capital they planned to bring.