China Credit close to averting default on troubled product
But a financial meltdown still looms over China's banking system
CHINA is close to averting a crisis over the default of a big shadow-banking product, which would have been the industry's first such default, with an announcement yesterday that an agreement is just around the corner.
Still, the spectre of a US-styled financial meltdown looms large over the country's banking system, as a host of shadow banking products is expected to come due this year and the next.
Chinese issuers' ability to honour the payment terms will test investors' nerves over the health of China's financial system. Even if they all succeed in staving off a default, the process, akin to a stress test, could weaken confidence in the Chinese financial system.
China Credit Trust is the first to test the market. It had been working to stave off what would have been the first default of a shadow banking product and the country's biggest default, a three billion yuan (S$633.3 million) t…
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