Blackstone Group LP and Bain Capital Credit LP  made their first investments in recent months.
Blackstone Group LP and Bain Capital Credit LP  made their first investments in recent months.

Global Distressed-Debt Funds Circle China Again

Global Distressed-Debt Funds Circle China Again

Global distressed-debt specialists are stepping up their deal-making in China after a decade, betting that the country is becoming serious about developing a market to tackle its $256 billion of official non-performing loans.
Groups such as Blackstone Group LP and Bain Capital Credit LP made their first investments in recent months, amid surging write-offs by banks and indications that China’s commercial bad loans market is set to deepen, Reuters reported.
Oaktree Capital Group LLC last month agreed to buy a portfolio of distressed loans with a face value of 3.1 billion yuan ($476.70 million), its fifth deal, according to Tony Rao, a partner with law firm Alpha & Leader, which helped provide due diligence on the deal.
More overseas cash is set to enter the market in 2018, said Rao, in spite of rising competition with local buyers that has sent average prices above 50 cents on the dollar.
NPLs on commercial bank balance sheets officially amounted to 1.67 trillion yuan ($256.80 billion) at the end of September, or 1.74% of all loans. Overdue loans—those not yet technically considered bad—reached 3.4 trillion yuan. Many analysts estimate actual amounts are much higher.
Loan write-offs by commercial lenders, one indication of how deeply banks are cleaning house, jumped 50% to about 1.4 trillion yuan in 2016, according to estimates by UBS analyst Jason Bedford.
An initial wave of foreign interest in China’s bad loans a decade ago, led by big western banks, faded as deals failed to materialize and legal uncertainties multiplied.
But China’s distressed-debt market has become more commercialized since then. “The market has broadened,” said Phil Groves, president of DAC Management LLC, a China-focused alternative investment manager and bad-loan servicing company that was bought by Blackstone last year. “There’s more to buy, bigger portfolios, and different types of credit available.”
Blackstone acquired its first-ever Chinese commercial loan portfolio for $195 million in August—the same month that Bain Capital Credit did its first-ever deal with the purchase of $200 million in mostly real estate backed loans in the coastal province of Jiangsu.
Bain is now looking at other real estate-backed portfolios and building a loan servicing team to handle future deals, said Kei Chua, Bain’s Hong Kong-based managing director.

Short URL : https://goo.gl/Db2VrL
  1. https://goo.gl/VVeR3C
  • https://goo.gl/R1SEKB
  • https://goo.gl/5Zj1kt
  • https://goo.gl/nfUKZW
  • https://goo.gl/R4HEK1

You can also read ...

Shares in German and other European car manufacturers fell on Friday after Trump threatened  to impose a 20% tariff on cars imported from the bloc.
An industrial powerhouse built on massive exports and a...
Ireland Facing Agri-Food Crisis
The latest dry spell has threatened another fodder emergency...
Companies like Toyota need AI talent to develop self-driving technologies, but the competition is intense with an estimated shortfall of 700,000 engineers.
China and the US are scrambling to secure one of the world's...
Airbnb Exodus Spawns Business Boom in Japan
As Airbnb home-sharers in Japan quit the market in droves,...
Duterte Says Economy in Doldrums
Philippine economic activity is stagnating in the provinces...
Thai SMEs Can Cash In on China’s Vast Online Market
China offers great opportunities to Thai small and medium-...
Escalation of protectionist measures could trigger a fresh global economic downturn.
Policymakers can maintain the current economic upswing beyond...
The symposium emphasized the importance of capacity building and skills development as an integral component of the digital agenda.
The 2018 International Telecommunication Union’s Global ICT...

Add new comment

Read our comment policy before posting your viewpoints