China is considering a plan where a unit of the central bank, PBOC, would assume more than CNY 100bn ($15bn) of assets from China Huarong Asset Management Company (CHAMC), according to sources. This would help clean up CHAMC’s balance sheet and refocus on its core business. The update comes a day after CHAMC’s unit Huarong International said it had a profitable first quarter. “The news suggests that the central government is examining options to provide bail-out solutions to Huarong. The potential involvement of the PBOC, which is experienced in handling distressed financial institutions, also gives the market more hope that the Huarong saga will be dealt with in an orderly way that is less likely to incur losses for offshore bondholders” said Dan Wang, an analyst at Bloomberg Intelligence
Most of Huarong’s bonds were trading up – its 4.25% perps traded 7.7 points higher to 67 cents on the dollar while its 4.75% 2027s traded up by 3.5 points to 83.4.
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