China's debt-for-equity swaps looking more like debt-for-debt move

Hong Kong

A KEY Chinese initiative to rein in the world's largest corporate-debt load is a programme swapping some loans into equity stakes. As the initiative gets going, however, it's becoming clear the debt isn't really going away.

In a late-summer notice, central government officials said that new bonds should be used to finance the swaps, effectively moving the debt off the balance sheets of the original lenders onto those buying the new debt.

The first such deal came in September, according to Chi…