From Barclays, a warning that:
- Industrial & Commercial Bank of China (ICBC) has refused to bail out an investment trust product it sold
- The trust is reportedly worth 3 billion yuan ($500 million)
- Consists of debt to Zhenfu Energy Group, a struggling coal miner
- Barclays says China’s financial regulators “could do worse” than letting the trust go to default, it fits with Beijing’s goal of reforming the nation’s financial markets & that “the default of trust products could have less social impact than the default of wealth-management products, bonds and other products sold to the general public or have problematic practices, such as asset-pool investments.”
- Barclays “believe the default of trust products could trigger some short-term negative impact to China’s financial sector and the reputation of financial institutions. However, we believe it would be positive for the healthy development of financial system in the long run.”
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Added:
OK, DJ/WS J Market Watch has an article on it here, saying “We’ll know for sure what happens on Jan. 31 when the product matures (coincidentally on the first day of Chinese New Year), but it looks like a default is a distinct possibility.”
Citing a Reuters report (here)
Zero Hedge have this, too.
