China Huarong Asset Management said that it is expecting a loss of RMB 27.6bn ($4bn) for 2022. The bad debt manager cited erosion in fair values of some of its equity assets on the back of volatility in the capital markets as reasons for the massive loss. This comes just two years after it had to be bailed out by the state following a record $15.9bn loss in 2020. Along with the profit warning, the company also said that Huarong and seven of its subsidiaries have been fined by the Ministry of Finance for ineffective risk controls and its accounting data being “severely distorted”, as per SCMP. Deloitte was also fined for failures in its audit work conducted at Huarong. The company responded by stating that it “will continue to strengthen internal controls and optimise [its] comprehensive risk-management system”.

Huarong’s 3.875% 2029s are trading ~1 point weaker at 70.63 cents on the dollar.

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