China Huarong debt selloff spreads to other asset managers

Business | 2 Jun 2021 3:06 pm

A selloff in China Huarong Asset Management Company's bonds is spreading to China's other major bad debt managers, Bloomberg reports.

The spread of a China Cinda Asset Management unit’s 3 percent dollar note due 2031 over Treasuries widened to 242 basis points Tuesday, the most since mid-April. A China Orient Asset Management unit’s 2.75 percent bond due 2030 closed at 231 basis points that day, the widest spread since the note was issued in November.

China Cinda, China Orient and China Great Wall Asset Management have combined liabilities of 2.9 trillion yuan (US$454 billion), including US$28 billion of outstanding dollar bonds, according to their latest financial statements and data compiled by Bloomberg.

The three borrowers haven’t tapped the offshore bond market while uncertainty hangs over Huarong. The last sale of dollar debt by any of the firms and their units was China Cinda HK Holdings Co’s US$2 billion offering in January.

China’s finance ministry is considering a proposal to transfer its shares in Huarong and the three other bad-debt managers to a new holding company modeled after the one that owns the government’s stakes in state-run banks, Bloomberg News reported on Tuesday.

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