Yes Virginia...It's a Bubble...

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

http://www.reuters.com/article/2014/...0MF0IG20140318

HONG KONG, March 18 (Reuters) - The looming bankruptcy of a Chinese developer owing billions of yuan to domestic banks has raised worries that a softening property market is heightening risks for the financial system. But the localised focus of the firm, and the nuanced reaction of investors, shows that financial markets are not pricing in the bursting of a real-estate bubble just yet. Government officials told Reuters on Tuesday that Zhejiang Xingrun Real Estate Co, based in the coastal city of Ningbo in Zhejiang province, is on the brink of bankruptcy. State media have estimated the company owes 15 domestic banks 2.4 billion yuan ($389 million) and individual investors another 1.1 billion, with only 3 billion yuan of assets on hand. By raising that money from individual investors, Zhejiang Xingrun's owner also broke Chinese law, and local officials told Reuters that the company's owner and his son are in custody, accused of illegal fundraising. Calls to Zhejiang Xingrun seeking comment were not answered.

The true test of Beijing's commitment to risk reform will come when it confronts a potential default by one of the state-owned enterprises that dominate loan and bond markets.

[GRG55]

Re: Yes Virginia...It's a Bubble...

High debt, but if memory serves $13b EBITDA last year (only 10% tax in Switzerland), but not sure I'd short the most sophisticated int'l trade financier out there with 40 yrs plus exp. in comm. trading. The co. is fundamentally different from their competitors, far less transparent and they tend to know things before others and position themselves to benefit. The marketing arm which is a very high margin business and lack of iron ore exposure differentiate them from the diversifieds, too. Freeport, BHP et al are an easier play, less black box and frankly less smart management.

Glencore is living off its legacy...still benefiting from the Marc Rich aura.

The retention package fiasco after the original announcement of the "merger" with Xstrata took the shine off. At the end of the day it was a dipstick deal at a stupid valuation, motivated purely to benefit the executives not the shareholders.

Below a direct extraction from the GlencoreXstrata website. I will never invest in a mining company that spouts this sort of crap publicly. Freeport is the better managed company...

"We aim to integrate sustainability in every area of our company and to create shared value for all our stakeholders"

[ST]

Re: Yes Virginia...It's a Bubble...

I think Glencore the international physical commodity trading firm is in serious trouble. They have $55 billion dollars in debt with declining commodity prices associated with China and I bet they are tied to some of the defaults by commodity firms in China as well.

High debt, but if memory serves $13b EBITDA last year (only 10% tax in Switzerland), but not sure I'd short the most sophisticated int'l trade financier out there with 40 yrs plus exp. in comm. trading. The co. is fundamentally different from their competitors, far less transparent and they tend to know things before others and position themselves to benefit. The marketing arm which is a very high margin business and lack of iron ore exposure differentiate them from the diversifieds, too. Freeport, BHP et al are an easier play, less black box and frankly less smart management.

[lektrode]

Re: Yes Virginia...It's a Bubble...

Maybe but I know it is one of the very few outcomes the market is not anticipating. There are funds out there betting against Japan or against China etc but not a commodity powerhouse like Glencore.

unless of course something else happens ?

[ProdigyofZen]

Re: Yes Virginia...It's a Bubble...

Maybe but I know it is one of the very few outcomes the market is not anticipating. There are funds out there betting against Japan or against China etc but not a commodity powerhouse like Glencore.

[lektrode]

Re: Yes Virginia...It's a Bubble...

I think Glencore the international physical commodity trading firm is in serious trouble. They have $55 billion dollars in debt with declining commodity prices associated with China and I bet they are tied to some of the defaults by commodity firms in China as well.

the next lehman ?

[ProdigyofZen]

Re: Yes Virginia...It's a Bubble...

I think Glencore the international physical commodity trading firm is in serious trouble. They have $55 billion dollars in debt with declining commodity prices associated with China and I bet they are tied to some of the defaults by commodity firms in China as well.

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

http://www.bloomberg.com/news/2014-0...om-stocks.html

China’s four-biggest lenders, which reported $126 billion of earnings in the 12 months through September, sank to the lowest valuations on record in Hong Kong trading yesterday.

The Big Four banks, all based in Beijing, tumbled an average 15 percent in Hong Kong this year through yesterday, led by an 18 percent retreat in AgBank.

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

http://www.ft.com/cms/s/0/27f9f4aa-a...44feab7de.html March 13, 2014

Beijing’s challenge is laid bare by the failure of Haixin Steel, a privately owned medium-sized mill in the heart of China’s coal country, to repay loans that came due last week. The default, disclosed to the Financial Times by steel traders, could send shockwaves through the local banking and shadow banking sectors.

Haixin is the largest privately owned steel mill in Shanxi and accounts for 60 per cent of the tax revenues in Wenxi County, home to 400,000 people in China’s coal heartland.

Haixin was also the lead investor, together with other local private companies, in Jinshang Investment Guarantee, which backed other companies’ debts for a fee. On Thursday, a website describing the credit guarantee company’s operations appeared to have been shut down.

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

13 Mar 2014 NUS unit flags 16 China firms with high bond default risks (pdf)
National University of Singapore Risk Management Institute via The Business Times

http://www.rmi.nus.edu.sg/aboutus/currentnews.php

The institute filtered out 16 companies that would have problems repaying their investors soon. These include Ruitai Materials Technology Co Ltd and Leshan Electric Power Co, which lack cash to repay investors of bonds that mature in the second half of this year.

Most of the financial figures are based on data from end-September last year. The exceptions are that of Fiyta Holdings Ltd and Leshan Electric Power Co, for which data is as at Dec 31 last year.

Ruitai, a Shenzhen-listed maker of fused cast refractories, has a 200 million yuan bond that is maturing in August this year, but has cash of only 150 million yuan. Its net debt is 1.21 billion yuan.
Similarly, Shanghai-listed Leshan - which generates and distributes hydroelectric power - has a 200 million yuan bond due in October, but its cash position stands at 82 million yuan. It has net debt of 1.63 billion yuan.

Others may miss their coupon payments. Paper product manufacturer MCC Meili Paper Industry Co Ltd has a 37.8 million yuan coupon payment due in September, but the company reported just three million yuan of cash.
Chaori - which has until April 7 to pay its investors under a 30-day grace period - is unlikely to meet the deadline since it has less than 60 million yuan of cash, RMI noted.

While Hangzhou Iron & Steel Co, and Xinjiang Ba Yi Iron & Steel Co Ltd are two cash-strapped companies with bonds also maturing in the third quarter, RMI noted that these firms have a direct government owner, which means that they may get some form of bailout.

These 16 companies, which include Chaori, are paying out coupons at the rate of between 4.55 per cent and 8.98 per cent. RMI screened the companies using a measure known as their probability of default (PD). These 16 firms made up the worst 5 per cent of PDs of all Chinese corporations that were assessed.

[jk]

Re: Yes Virginia...It's a Bubble...

Can anybody tell me why Chinese interbank rates are falling on the widening credit crisis? AEP at UK Telegraph noted it today.

Interbank rates don't fall in a widening credit crisis.

if libor has been fake all these years, why should we believe anything in particular about chinese interbank rates?

[vinoveri]

Re: Yes Virginia...It's a Bubble...

Can anybody tell me why Chinese interbank rates are falling on the widening credit crisis? AEP at UK Telegraph noted it today.

Interbank rates don't fall in a widening credit crisis.

did you forget PBOC? Central Bank backstops, guarantees etc.
remember the crisis of 2008, Libor spiked, but was quickly brought under control by the Fed lowering rates, guranteeing deposits, and assuring the market that it would "lend" (read create) money for junk
remember LIEbor

[coolhand]

Re: Yes Virginia...It's a Bubble...

I have a post in the select section tracking the China default developments. This is to be re-visited: http://www.voxeu.org/article/china-s-property-bubble

Can anybody tell me why Chinese interbank rates are falling on the widening credit crisis? AEP at UK Telegraph noted it today.

Interbank rates don't fall in a widening credit crisis.

[ProdigyofZen]

Re: Yes Virginia...It's a Bubble...

I have a post in the select section tracking the China default developments. This is to be re-visited: http://www.voxeu.org/article/china-s-property-bubble

[Slimprofits]

Re: Yes Virginia...It's a Bubble...

From back on 2/13 and this time I checked to ensure that GRG hasn't already posted it:

Six Chinese trust firms have lent more than 5 billion yuan ($824.6 million) to a delinquent coal company, state media reported on Friday, raising the prospect of further defaults in China's so-called shadow banking system.

In addition, investors in a trust product already in default have pledged to seek repayment not only from the trust firm itself, but also from China Construction Bank (CCB) (601939.SS) (0939.HK), the country's second-largest lender, which acted as sales agent for the high-yield investment products issued by Jilin Province Trust Co Ltd.

The paper did not name the other trust companies that lent to Liansheng, but reported that six trust firms have 5 billion yuan in exposure, citing an unnamed source.

http://www.reuters.com/article/2014/...A1D06420140214