美國公司可能贏得清理中國不良債務的有利可圖工作

Yahoo Finance on 18 January 2020 reported the following:

U.S. Firms Could Win Lucrative Job of Cleaning Up China's Bad Debt

Bloomberg Bloomberg News,Bloomberg 16 hours ago

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(Bloomberg) -- One surprising part of the trade deal struck between U.S. President Donald Trump and Beijing is that U.S. investors won a direct shot at the potentially lucrative job of helping China clean up its heap of bad debt.

China is embracing foreign capital as it grapples with a tide of soured debt. Some estimate it to have topped $1 trillion as the trade war weighed on economic growth and a long crackdown on shadow banking choked off liquidity.

The Communist Party-ruled nation is trying to instill more discipline in the market as corporate defaults have hit records for two straight years and its vast regional banking network struggles to cope. Growing participation by foreign investors could relieve pressure on the mainly state-owned firms that so far have been the front-line in dealing with the bad debt problem. It could also result in a more market-driven pricing of soured borrowings.

U.S. firms including Oaktree Capital Group and Bain Capital Credit have already been pushing into one of the world’s biggest distressed debt market. The trade deal will allow financial services companies from the U.S. to apply for licenses to buy non-performing loans, or NPLs, directly from banks, cutting out the middle man they have to go through now.

“China’s NPL market is large and growing, and opportunities for deeply discounted investments are enticing foreign firms with NPL experience in other markets,” said Brock Silvers, managing director at Adamas Asset Management in Hong Kong.

Gaining access is one thing, but succeeding is another. Top-down run China can be an arbitrary place to do business, and local knowledge and contacts are required in the 1.4 billion person nation. Foreign firms have often grappled with unpredictable courts, fraud and challenges of sourcing bad loans. A web of local enterprises are often closely connected to regional banks and the local government, making it hard to navigate.

The market has grown significantly in recent years. But lack of experience has been an obstacle and many firms that stuck their toe in eventually pulled back because of difficulties in working out bad loans in China’s system, according to Benjamin Fanger, a managing partner at ShoreVest Partners, a distressed debt firm.

“Some foreign investors are still continuing to push forward to try to learn and this new agreement opening to direct deals with banks might add more interest again,” he said. “But doing Chinese NPLs requires a very significant commitment of time and resources to build up local sourcing, underwriting and servicing/exit capability.”

The sheer pace in the buildup in soured debt is proving a potent lure. Bad debt held by commercial banks jumped almost 20% in the first nine months of last year to 2.4 trillion yuan, according to the China Banking and Insurance Regulatory Commission.

Data shows that overseas purchases of bad loan portfolios nearly tripled in 2018 to 30 billion yuan, Savills has said in a report. Active international players include Oaktree, Loan Star, Goldman Sachs, Bain, PAG and CarVal, according to the real estate and research firm.

Savills said the overseas investors typically target loan books as large as $100 million, compared with domestic investors who seek to buy small batches of about $30 million. Targeted returns are usually 12-15%, unleveraged, or 17-22%, with leverage.

China’s recent financial tightening has also led to opportunities for some foreign investors since some local investors are struggling to conclude deals, according to Savills.

While the trade deal applies to U.S. financial services firms, the government could potentially broaden the scope to include European firms in time, according John Xu, a Shanghai-based partner at Linklaters that advises international funds on buying nonperforming loans.

“The challenge is that there is a quota on the licenses per province, so there may not be sufficient licenses in some of the main provinces,” said Xu.

ShoreVest Partners wasted no time in moving ahead and is in talks “with several provincial and municipal governments” about the new agreement and what the first steps would be toward obtaining an asset management company license, according to Fanger, a China bad debt veteran who speaks fluent Mandarin.

But further steps will be needed to tame the unpredictability of the Chinese market.

“If Beijing is to eventually get a handle on China’s over-indebtedness, it will have to allow for a predictable, rule-based nonperforming loan enforcement process,” said Silvers at Adamas in Hong Kong.

Translation

（彭博社）-美國總統唐納德·特朗普與北京達成的貿易協議中令人驚訝的一部分是美國投資者贏得了直接的機會幫助中國清理不良債務這一潛在豐厚工作。

中國正在擁抱外資去應對債務危機的浪潮。一些人估計，由於貿易戰對經濟增長造成壓力，對影子銀行的長期打擊遏制了流動性，它的債務值已突破1萬億美元。

共產黨統治的國家正試圖在市場上引進更多的紀律，因為企業違約率已連續兩年創下紀錄，而其龐大的區域銀行網絡也難以應對。越來越多的外國投資者參與可以減輕對主要國有企業的壓力，這些企業迄今為止一直是在第一線處理壞賬問題。這也可能使到不良貸款的定價更為市場導向。

橡樹資本集團（Oaktree Capital Group）和貝恩資本信貸（Bain Capital Credit）等美國公司已經進入了全球之一最大的不良債務市場。這項貿易協議將使美國金融服務公司可以直接從銀行申請購買不良貸款(NPLs) 的許可證，從而消除了他們現在必須經過中介人。

阿達瑪斯資產管理公司香港董事總經理布羅克•西爾弗斯（Brock Silvers）表示：“中國的不良貸款市場規模龐大而且正在增長，大量折價投資的機會正在吸引在其他市場擁有不良貸款經驗的外國公司。”

獲得入市權是一回事，而成功則是另一回事。中國的經營方式是自上而下, 可以绕過制度地做生意，身在這個1​​4億人口的國家是需要當地的知識和聯繫。外國公司經常要面對不可預測的法院裁判，欺詐行為, 和去尋找不良貸款的挑戰。本地企業網絡通常與區域銀行和地方政府緊密相連，因此很難駕馭。

近年來該市場顯著增長。陷入困境的債務公司ShoreVest Partners的執行合夥人本傑明•桑格（Benjamin Fanger）說，缺乏經驗一直是一個障礙，許多公司因難以解決中國系統中的不良貸款問題陷入困境而引退。

他說：“一些外國投資者仍在繼續努力學習，新的協議開放直接與銀行交易可能會增加更多投資者興趣”; “但是，開展中國不良貸款需要大量時間和資源以建立本地业务来源，承保, 和服務/退出能力。”

单是債務累積的驚人步伐已證明了它的潛在誘惑。根據中國銀行業和保險監督管理委員會的數據，去年年頭九個月，商業銀行持有的不良債務增長了近20％，達至人民幣2.4萬億元。

第一太平戴維斯（Savills）在一份報告中表示，數據顯示出2018年海外購買不良貸款組合的規模幾乎增長了三倍，達到人民幣300億元。據房地產和研究公司稱，活躍的國際企業包括橡樹，貸款之星，高盛，貝恩，PAG和CarVal。

第一太平戴維斯（Savills）說，海外投資者通常將目標貸款額定為1億美元, 相比國內投資者尋求購買約3000萬美元的小額貸款。無槓桿的目標回報率通常為12-15％, 或有槓桿的17-22％。

第一太平戴維斯指出，中國最近的金融緊縮也為一些外國投資者帶來了機會，因為一些當地投資者正在努力結清手中的交易。

Linklaters是一間專為購買不良貸款的國際基金公司提供建議的企業, 它駐上海的合夥人約翰·許（John Xu）表示，雖然貿易協議適用於美國金融服務公司，但政府可能會及時擴大範圍，去包括歐洲公司。

許說,“挑戰在於每個省的許可證都有配額，因此在一些主要省份可能沒有足夠的許可證，”

桑格作為一個会說流利普通話的中國不良債務資深人士說，ShoreVest Partners将会毫不猶豫地繼續前進，並正在就新協議進行商谈有關要取得資產管理公司許可證程骤的第一步。

但還需要採取進一步措施去克服中國市場的不可預測性。

香港阿達瑪斯(Adamas Asset Management) 的西爾弗斯（Silvers）說“如果北京最終要解決中國的過度負債問題，它將要考慮准许一個可預測, 和基於規則的不良貸款執行程序”。

Comments

      It seems that China needs some outside help to deal with its financial mess. I do not think there are no good laws and regulations in China that govern loan lending and borrowing activities. The problem is that some people in the system are above the law and that corruption is commonplace among the people engaged in these activities. I think China has to make an effort to change politically, culturally and socially before it can rid its financial mess and other ruling problems.