China’s top manager of distressed assets said it would post a big loss and expects to get a capital infusion from state-owned financial institutions
China’s top manager of distressed assets said it would post a massive loss and expects to receive a capital infusion from state-owned financial institutions, avoiding a messy default that would have had wide repercussions for Asia’s credit markets.
China Huarong Asset Management Co., which is majority owned by China’s Ministry of Finance and the largest of the country’s managers of nonperforming loans and other bad debt, also said it has no plans to restructure its debt, cementing beliefs among investors that many Chinese institutions are too big to fail.
Late Wednesday, the company said it expects to post a net loss equivalent to about $16 billion for 2020. Earlier this year, the firm’s delay in releasing its results spooked international investors andThe Beijing-based firm blamed its past overexpansion and other problems on former Chairman Lai Xiaomin, who wasof bribery and embezzlement. It also said the coronavirus pandemic and its negative impact on markets caused a swift deterioration in some of its assets.
Huarong said five state-owned financial firms, including Citic Group, fellow bad-debt manager China Cinda Asset Management and an investment unit of China Life Insurance Co. , have signed an agreement to purchase newly issued shares, though it didn’t detail how much capital they planned to contribute.
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