State-backed China Orient Asset Management is issuing an RMB 10bn ($1.6bn) bond where proceeds will be used to “help with the disposal of bad assets and resolve financial risks in the property market”, as per a filing with the National Interbank Funding Center. The bond has a 3Y maturity and a coupon of 2.5-3.5% and is the first bond issuance by one of China’s five big asset management companies (AMCs) to help the troubled property market. This comes after financial regulators had summoned AMCs in January, to study how they could participate in asset disposals of troubled developers and related M&As. While some Chinese banks like CMB, Industrial Bank, Pudong Bank etc. issued bonds to support acquisition of distressed property projects, analysts say that China Orient’s deal would be seen as a ‘direct sign of state support’. Some analysts also note that the scale of China Orient’s issuance is not big and is probably just testing the waters.
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