An arm of financial conglomerate China Citic Group said it won’t make an interest payment on time to investors because one of its debtors missed a payment, in the latest example of the potential risks within China’s massive but poorly regulated informal lending system.
Citic Trust Co. said in a statement late Friday that it missed an interest payment due Dec. 20 to investors in one of its one trust products. It didn’t disclose the size of the payment.
This could be a source of jitters for the markets. It does seem to be a one-off (China bears, feel free to chime in here
); and note this:
The investment product is allowed to delay interest payments for three months, according to its prospectus, so it could still meet its obligations.
Delayed Payment Puts Spotlight on China’s Trust Companies (Gated WSJ article. A news search on the headline may turn something up).
