Monthly Archives: October 2016

As China tackles corporate debt, risks spread wider

Vaniceseasonal's Blog

Thanks;Sumeet Chatterjee and Shu Zhang @HONG KONG/BEIJING

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A 100 Yuan note is seen in this illustration picture in Beijing March 7, 2011. REUTERS/David Gray/File Photo

China’s plan to curb spiraling bank debt at weak state-owned companies could shift growing credit risks away from financial institutions and to the country’s private investors, analysts say.

Beijing earlier this month unveiled much-awaited guidelines for a plan to lower the country’s $18 trillion corporate debt – now at 169 percent of domestic output – by allowing stressed companies to swap part of their debt for equity investment.

So far, two such debt-reduction deals involving indebted state-owned firms have been announced: China Construction Bank Corp (CCB) (601939.SS) units will buy debt from some creditors to Yunnan Tin Group Co and Wuhan Iron and Steel Group Corp and swap it for equity in companies of the respective groups.

China’s efforts to curb corporate…

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As China tackles corporate debt, risks spread wider

Thanks;Sumeet Chatterjee and Shu Zhang @HONG KONG/BEIJING A 100 Yuan note is seen in this illustration picture in Beijing March 7, 2011. REUTERS/David Gray/File Photo China’s plan to curb spi…

Source: As China tackles corporate debt, risks spread wider

As China tackles corporate debt, risks spread wider

Thanks;Sumeet Chatterjee and Shu Zhang @HONG KONG/BEIJING

Cv2F4AFUEAAFvr0.jpg

A 100 Yuan note is seen in this illustration picture in Beijing March 7, 2011. REUTERS/David Gray/File Photo

China’s plan to curb spiraling bank debt at weak state-owned companies could shift growing credit risks away from financial institutions and to the country’s private investors, analysts say.

Beijing earlier this month unveiled much-awaited guidelines for a plan to lower the country’s $18 trillion corporate debt – now at 169 percent of domestic output – by allowing stressed companies to swap part of their debt for equity investment.

So far, two such debt-reduction deals involving indebted state-owned firms have been announced: China Construction Bank Corp (CCB) (601939.SS) units will buy debt from some creditors to Yunnan Tin Group Co and Wuhan Iron and Steel Group Corp and swap it for equity in companies of the respective groups.

China’s efforts to curb corporate leverage in the system, especially among state-owned companies, are targeted at reviving a slowing economy.

But analysts say the structuring of such transactions pushes the risk to other parts of the economy, specifically the individual investor.

“Overall these transactions can be very large in scale – we are talking about billions if not tens of billions (of dollars) of debt that needs to be renegotiated, revalued and potentially converted into some form of equity,” said Wei Hou, senior China analyst at Sanford C. Bernstein.

“The risk within banks is being shared to a more broader set of capital market.”

In the two deals announced so far, CCB, China’s second-biggest lender, has listed insurance funds, asset management companies, pension funds, and wealth management products (WMPs) among the sources of funding for taking on corporate debt.

Through the debt-for-equity swap arrangement, lenders can use their off-balance sheet units to buy bank debt owed by the companies targeted by the debt-reducing exercise.

To buy the debt, the units can raise money from private investors through insurance and pension funds as well as WMPs.

Representatives of CCB and Wuhan Iron did not immediately respond to Reuters’ request for comment on possible risk for individual investors in debt to equity swaps. Yunnan Tin did not immediately respond to phone calls and a fax sent to its office.

OVER-STRETCHED

The new rules for swapping debt into equity come after some senior Chinese bankers had resisted the idea of having lenders taking stakes directly in weak firms.

WMPs, much-liked by Chinese savers as they offer potentially high gains, have driven an explosion of shadow-credit in China, now at about 60 percent of domestic output according to the International Monetary Fund.

Ding Wei, deputy governor of China Merchants Bank, told Reuters at a press conference last week that the bank would be interested in investing some WMP funds into debt-for-equity swaps-related projects, if those investments brought reasonable returns.

In the Yunnan Tin deal, a CCB unit is raising money from various sources including asset management firms, pension funds and qualified individual investors through WMPs to buy 10 billion yuan ($1.5 billion) of loans, the bank said this month.

Survey points to higher U.S. birth rate in future: CDC

Vaniceseasonal's Blog

Thanks; David Beasley

6666666.jpgA girl plays in front of the skyline of New York’s Lower Manhattan and One World Trade Center in a park along the Hudson River in Hoboken, New Jersey, September 5, 2013. REUTERS/Gary Hershorn

More U.S. women expect to have children some time in the future than they did in 2002, according to a federal study released on Thursday, which could point to a higher U.S. birth rate.

A survey by the U.S. Centers for Disease Control and Prevention (CDC) found that half of women aged 15–44 expected to have children, up from 46 percent in a 2002 survey.

“It’s not a huge increase but it is a statistically significant increase,” one of the study’s authors, Jill Daugherty, said.

The increase could indicate a higher U.S. birth rate at some point in the future, Daugherty said. The new study did not examine what was behind the increase.

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Survey points to higher U.S. birth rate in future: CDC

Thanks; David Beasley A girl plays in front of the skyline of New York’s Lower Manhattan and One World Trade Center in a park along the Hudson River in Hoboken, New Jersey, September 5, 2013.…

Source: Survey points to higher U.S. birth rate in future: CDC

Survey points to higher U.S. birth rate in future: CDC

Thanks; David Beasley

6666666.jpg

A girl plays in front of the skyline of New York’s Lower Manhattan and One World Trade Center in a park along the Hudson River in Hoboken, New Jersey, September 5, 2013. REUTERS/Gary Hershorn

More U.S. women expect to have children some time in the future than they did in 2002, according to a federal study released on Thursday, which could point to a higher U.S. birth rate.

A survey by the U.S. Centers for Disease Control and Prevention (CDC) found that half of women aged 15–44 expected to have children, up from 46 percent in a 2002 survey.

“It’s not a huge increase but it is a statistically significant increase,” one of the study’s authors, Jill Daugherty, said.

The increase could indicate a higher U.S. birth rate at some point in the future, Daugherty said. The new study did not examine what was behind the increase.

The overall number of U.S. births declined slightly in 2015 to 3.97 million from 3.98 million the year before, according to the CDC. The drop followed an increase in 2014, the first since 2007, the agency said.

Since 2002, there has also been a slight decrease in the statistical average number of children women expect to have, from 2.3 to 2.2, according to the survey of 5,699 women.

As women age, their expectations for having children decrease regardless of how many children they already have, the study found.

More than two-thirds of married women did not expect to have a child in the future and 82 percent of women who already had two children did not expect to have another, it found.

The rate of births to teenage mothers in the United States has dropped dramatically in recent years to record lows.

(Reporting by David Beasley in Atlanta; Editing by Curtis Skinner and Janet Lawrence)