Archive for the ‘People’s Bank of China’ Category

Breaking China

Friday, November 22nd, 2013

If the United States relies on China as its main lender, what happens when China is having difficulties with its debt?

We may soon find out.  As the Financial Times reported, “several banks have had to delay or dramatically reduce Chinese bond issues as the impact of a tight onshore credit market begins to be felt.”China

Zerohedge noted that Chinese bond issuers are dealing with the drying up of interbank market liquidity, increased competition from wealth management and trust products, and other problems.  At the same time, one analyst said, “China is much more funding dependent than in the past.”

Chinese issuers are steering around their problems by increasing offshore issuance, raising a record $51.6 billion outside of China so far this year, which is more than double the $24.5 billion raised in the same period last year, according to Dealogic.

Unless the People’s Bank of China changes its attitude on liquidity, the analyst said, “it’s going to end pretty ugly.”