Chinese long-tenor trade loans raise eyebrows

[SINGAPORE] A form of long-term loan commonly sought by Chinese importers is raising questions as to whether such credit has been fed into the shadow banking system, bankers said.

This comes as commodity loans such as copper-backed loans - some of which have loan tenors extending beyond six months - are now increasingly booked in Singapore.

Through these long-tenor letters of credit (LCs), also known as 360-day LCs, Chinese importers take in commodities such as copper and iron from offshore players - including importers' offshore subsidiaries.