Chinese Borrowers Hidden Liabilities Loom Large
Staggering amounts of maturing debt owed by Chinese borrowers are common headlines for generalist newswires. But those numbers do not include off-balance-sheet borrowings and other liabilities, which increasingly exasperate investors, and increase volatility in Chinese issuers’ bonds. Yuzhou Group recently sounded out market interest in a third private bond deal in recent months. As Reorg revealed, the last private issue - a $100 million 6% 361-day issue priced at 98.12% in September - was marketed with an ISIN code and a private page on Bloomberg. The issuer was a BVI-incorporated SPV. These off-balance sheet deals create volatility in bond prices - despite company...
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