{"id":42917,"date":"2019-01-17T12:49:33","date_gmt":"2019-01-17T17:49:33","guid":{"rendered":"https:\/\/olduvai.ca\/?p=42917"},"modified":"2019-01-17T12:49:33","modified_gmt":"2019-01-17T17:49:33","slug":"bankrupt-chinese-company-reported-cash-15-times-greater-than-due-debt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=42917","title":{"rendered":"Bankrupt Chinese Company Reported Cash 15 Times Greater Than Due Debt"},"content":{"rendered":"
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Bankrupt Chinese Company Reported Cash 15 Times Greater Than Due Debt<\/span><\/a><\/h3>\n<\/div>\n
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That China has had a problem with rising defaults is not news: as we reported back in October<\/a>, 2018 was already set to be a record year for Chinese bankruptcies. Things only got worse in November and December when defaults spiked to 20.4 billion yuan<\/a> ($3 billion) confirming that the supportive policies from the People\u2019s Bank of China announced more than a month ago have yet to yield the intended effect.<\/p>\n

\u201cDefaults will stay elevated [in 2019] because the Chinese economy is expected to slow and off-balance-sheet lending has been shrinking,\u201d said Yang Hao, analyst at Nanjing Securities. The funding environment has yet to improve significantly for certain corporations, he added.<\/p>\n

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Predictably, just like in the US, Chinese investors have shunned lower-rated notes, and only relatively stronger firms were able to access the local bond market in recent months. Non-finance companies rated below AA publicly sold 1.27 trillion yuan of notes for the first 11 months of 2018, the lowest in four years. In contrast, companies with above AA+ ratings sold almost 3.28 trillion yuan bonds, up about 40 percent from last year.<\/p>\n

None of this is news.<\/p>\n

What is surprising however, is what happened when the latest Chinese corporate default took place on Tuesday: that’s when Jiangsu-based Kangde Xin Composite Material Group, failed to pay a 1 billion yuan ($148 million) local note due Jan. 15 due to a liquidity crunch, according to the company. <\/strong>The shocking punchline: as research analyst Tim Yup caught earlier this week,\u00a0 as of end-September the company reported that it “had” 15.4 billion yuan in cash and equivalents, more than double the total amount of its short-term debt, and more than 15 times the amount of debt that it just defaulted on!<\/strong><\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Bankrupt Chinese Company Reported Cash 15 Times Greater Than Due Debt That China has had a problem with rising defaults is not news: as we reported back in October, 2018 was already set to be a record year for Chinese bankruptcies. Things only got worse in November and December when defaults spiked to 20.4 billion […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1361,1035,130,195,4318],"class_list":["post-42917","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bankruptcy","tag-cash","tag-china","tag-debt","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/42917","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=42917"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/42917\/revisions"}],"predecessor-version":[{"id":42918,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/42917\/revisions\/42918"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=42917"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=42917"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=42917"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}