Yangzijiang Shipbuilding (Holdings)

[Greenrookie]

You are wrong about Yangzijiang's financial assets. Most of them were shadow banking assets. You can check its past financial statements and annual reports.

I agreed they are shadow assets. The majority of these loans are extended to property sector, and YZJ are trying to develop a property arm, so if it could seize the land as collateral, it's not a total loss.

That's why with the troubled ICBC 3 billion trust, I ask who gets the mine. In this case, YZJ should get the land if there is a default? Or would it have to share with the bank?

[freedom]

Normally there are more senior creditors than the shadow banking asset owners. Most of the shadow banking asset owners are just one tranche above the equity holders. So it depends on whether the senior creditors claim the collateral. If they do, the shadow banking asset owners could end up with nothing.

[CityFarmer]

http://www.businesstimes.com.sg/breaking...r-20140214

More detail from Today...

6 Chinese shadow banks face default over S$1.04b exposure to coal firm

SHANGHAI — Six Chinese trust firms have lent more than 5 billion yuan (S$1.04 billion) to a delinquent coal company, state media reported yesterday, raising the prospect of further defaults in China’s shadow banking system.

In addition, investors in a trust product already in default have vowed to seek repayment not only from the trust firm, but also from China Construction Bank (CCB), the country’s second-largest lender, which acted as sales agent for the high-yield investment products issued by Jilin Province Trust.
...
http://www.todayonline.com/business/6-ch...-coal-firm

[BlueKelah]

http://www.businesstimes.com.sg/breaking...r-20140214

More detail from Today...

6 Chinese shadow banks face default over S$1.04b exposure to coal firm

SHANGHAI — Six Chinese trust firms have lent more than 5 billion yuan (S$1.04 billion) to a delinquent coal company, state media reported yesterday, raising the prospect of further defaults in China’s shadow banking system.

In addition, investors in a trust product already in default have vowed to seek repayment not only from the trust firm, but also from China Construction Bank (CCB), the country’s second-largest lender, which acted as sales agent for the high-yield investment products issued by Jilin Province Trust.
...
http://www.todayonline.com/business/6-ch...-coal-firm

Keywords to keep in mind are DOMINOES and JENGA
one falling after another will eventually lead to a large CRASH and a lot of entertaining fun

[CityFarmer]

Quite a bit of updates from YZJ website:
http://www.yzjship.com/en_news.asp

of significance is perhaps the 3rd 10000 TEUs ship for seaspan has reached the undocking stage. Not sure what that means.. Does it mean it is ready for naviation, water test?

The next delivery is expected on April 2014, so it seems the delivery is on track, and Sea Trial is on the way...

(vested)

[CityFarmer]

You are wrong about Yangzijiang's financial assets. Most of them were shadow banking assets. You can check its past financial statements and annual reports.

I agreed they are shadow assets. The majority of these loans are extended to property sector, and YZJ are trying to develop a property arm, so if it could seize the land as collateral, it's not a total loss.

That's why with the troubled ICBC 3 billion trust, I ask who gets the mine. In this case, YZJ should get the land if there is a default? Or would it have to share with the bank?

I agree with you. In fact, base on the past records, it seemed the party benefited most from the NPLs, are the Asset Management Co. (AMC)

The ways YZJ dealing with defaults on HTM so far, were very similar as AMC with banks' NPLs bought..

[Observers]

Normally there are more senior creditors than the shadow banking asset owners. Most of the shadow banking asset owners are just one tranche above the equity holders. So it depends on whether the senior creditors claim the collateral. If they do, the shadow banking asset owners could end up with nothing.

Probably if these debtors are so desperate for shadow banking, its precisely because banks won't lend to them? I mean if you can get cheap credit from state owned banks, why bother with shadow banking in the first place? I heard in China, you need to have connections, like being an SOEs or large listed enterprise, to get a commercial loan from banks. SME mostly can only depend on shadow banking with high interest rates.

[CityFarmer]

Normally there are more senior creditors than the shadow banking asset owners. Most of the shadow banking asset owners are just one tranche above the equity holders. So it depends on whether the senior creditors claim the collateral. If they do, the shadow banking asset owners could end up with nothing.

Probably if these debtors are so desperate for shadow banking, its precisely because banks won't lend to them? I mean if you can get cheap credit from state owned banks, why bother with shadow banking in the first place? I heard in China, you need to have connections, like being an SOEs or large listed enterprise, to get a commercial loan from banks. SME mostly can only depend on shadow banking with high interest rates.

The SMEs can not get credit from banks, isn't due to their credibility. The big five (four previously) banks hold substantial capitals in China, (Base on last numbers I have, more than 50% capital are with the banks) and the lending is mostly policy-based, thus created an imbalance in credit market.

[freedom]

Small and Medium Enterprise Business
The Bank devoted itself to providing SME customers with specialized, efficient and convenient financial services through
construction of an independent and complete policy system, business process and product system of SME credit, prioritized
allocation of credit resource and improvement of franchised institution construction. With special credit plans for small
enterprise customers, the Bank improved refined management level and steadily expanded credit market for small and
micro enterprises on the premise of taking risk control and prevention into account. The Bank launched supply chain
financing business to core enterprises and their upstream and downstream enterprises, customized business solutions to
extensive small and micro enterprises in specialized markets and industrial clusters and optimized customer structure and
income structure of the Bank at the same time of giving more supports to small and micro enterprise development. At
the end of June 2013, the balance of loans to small (micro) and medium enterprises was RMB4,253,454 million, including
RMB2,395,192 million and RMB1,858,262 million to medium enterprises and small and micro enterprises, respectively.
LOANS TO DOMESTIC SMALL (MICRO) AND MEDIUM-SIZED ENTERPRISES
In RMB millions, except for percentages
At 30 June 2013 At 31 December 2012
Item Amount
Percentage
(%) Amount
Percentage
(%)
Loans to small (micro) and medium-sized
enterprises
4,253,454 48.5 4,231,203 51.1
Including: Medium-sized enterprises 2,395,192 27.3 2,391,127 28.9
Small and micro enterprises 1,858,262 21.2 1,840,076 22.2
Notes: (1) The percentage refers to the proportion of loans of domestic branches.
(2) Loans to small and micro enterprises include personal business loans.
(3) Due to changes in the size of small (micro) and medium-sized enterprises, data of the small (micro) and medium-sized
enterprises for the two reporting periods are incomparable.

Why would people keep closing eyes about realities? The SMEs are getting their fair share of credit from state owned banks. The quote is from the recent half-year report from ICBC page 39.

Out of total corporate lending, 48.5% went to domestic SMEs. At the end of FY2012, it was 51.1. If that's not lending to SMEs, I am not sure what is.

[Observers]

Normally there are more senior creditors than the shadow banking asset owners. Most of the shadow banking asset owners are just one tranche above the equity holders. So it depends on whether the senior creditors claim the collateral. If they do, the shadow banking asset owners could end up with nothing.

Probably if these debtors are so desperate for shadow banking, its precisely because banks won't lend to them? I mean if you can get cheap credit from state owned banks, why bother with shadow banking in the first place? I heard in China, you need to have connections, like being an SOEs or large listed enterprise, to get a commercial loan from banks. SME mostly can only depend on shadow banking with high interest rates.

The SMEs can not get credit from banks, isn't due to their credibility. The big five (four previously) banks hold substantial capitals in China, (Base on last numbers I have, more than 50% capital are with the banks) and the lending is mostly policy-based, thus created an imbalance in credit market.

That's right; only an credit imbalance on a massive scale can support a shadow banking industry of that same scale.

And if YZJ were amateurish enough not to ensure there isnt a bank lien before extending millions in credit on collateral, then YZJ deserves every bit of the fallout. Last I heard few years ago YZJ supposedly hired from the pool of actual professional bankers to do proper bank-like due diligence for their loans.