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01-09-2012, 11:16 PM
(This post was last modified: 01-09-2012, 11:20 PM by potatolover.)
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Debts rollover in China: the curious case of steel
companiesinSharedigg30 August, 2012, 17:53. Posted by Zarathustra
Chinese banks are keeping local government financing vehicles (LGFVs) and many companies afloat essentially by rolling over their debts. Although many of the local governments and companies may well end up unable to repay their loans eventually, banks are at least delaying the inevitable surge of non-performing loans.
The market seems to think that way too as Chinese banks shares have not been doing very well after some seemingly decent recent result announcements as the lack of deterioration of asset quality looked suspicious to many. No one seems to genuinely believe that what have been reported by banks are what really happened.
Earlier we noted that banks are indeed rolling over debts for good local governments (whatever “good” means). Now, we read something rather amusing from Yangcheng Evening News regarding banks possibly rolling over debts owed by steel companies. Based on the first half results of these steel companies, besides the fact that short-term loans are all increasing:
… more and more companies’ cash flow statement are showing similar numbers for the items “debt repayment” and “cash raised from new loans”, as though old debts were being swapped into new debts. For example, Magang raised RMB21.92 billion from new loans, and repaid RMB22.59 billion. Ling Yuan Iron and Steel raised RMB2.8 billion from new loans, and repaid RMB2.93 billion…
Apparently, according to the report, quite a number of other steel companies are reporting similar phenomenon where new loans and debt repayments deviated by less than 10%, and it seems that the last time this happened was in 2009.
This is, of course, almost anecdotal, thus do take that with a grain of salt.
Novo warns of Q1 loss
ByTeo Si Jia print |email this article Novo Group Ltd on Friday said it expects to record a loss in its unaudited consolidated quarterly results for the first quarter ended 31 July.
The decline in trading business was due to the uncertain economic situation in Europe and concerns of a hard landing in China.
Debts rollover in China: the curious case of steel
companiesinSharedigg30 August, 2012, 17:53. Posted by Zarathustra
Chinese banks are keeping local government financing vehicles (LGFVs) and many companies afloat essentially by rolling over their debts. Although many of the local governments and companies may well end up unable to repay their loans eventually, banks are at least delaying the inevitable surge of non-performing loans.
The market seems to think that way too as Chinese banks shares have not been doing very well after some seemingly decent recent result announcements as the lack of deterioration of asset quality looked suspicious to many. No one seems to genuinely believe that what have been reported by banks are what really happened.
Earlier we noted that banks are indeed rolling over debts for good local governments (whatever “good” means). Now, we read something rather amusing from Yangcheng Evening News regarding banks possibly rolling over debts owed by steel companies. Based on the first half results of these steel companies, besides the fact that short-term loans are all increasing:
… more and more companies’ cash flow statement are showing similar numbers for the items “debt repayment” and “cash raised from new loans”, as though old debts were being swapped into new debts. For example, Magang raised RMB21.92 billion from new loans, and repaid RMB22.59 billion. Ling Yuan Iron and Steel raised RMB2.8 billion from new loans, and repaid RMB2.93 billion…
Apparently, according to the report, quite a number of other steel companies are reporting similar phenomenon where new loans and debt repayments deviated by less than 10%, and it seems that the last time this happened was in 2009.
This is, of course, almost anecdotal, thus do take that with a grain of salt.
Novo warns of Q1 loss
ByTeo Si Jia print |email this article Novo Group Ltd on Friday said it expects to record a loss in its unaudited consolidated quarterly results for the first quarter ended 31 July.
The decline in trading business was due to the uncertain economic situation in Europe and concerns of a hard landing in China.