Chinese Provinces Report GDP, Debt Ridden Shanxi Yet to Report, Coal Defaults Mount

Three have yet to report: the rust belt and commodity provinces Heilongjiang, Shanxi and Liaoning.

The headline going around is how 24 of the 28 provinces that have reported have beaten the national GDP growth rate.

An article out today describes Shanxi as "debt ridden:" 山西最紧张时刻:万亿巨债缠身 相当于全省GDP
Since April 2016, Shanxi coal companies there were several bond debt default and pause, cancel issuance.

Under the huge pressure of the top debt, the banking sector had to Shanxi by easy credit, and the issuance of bonds, difficulties in helping businesses weather the storm, and "zombie companies" orderly exit.
The coal sector has as much debt as Shanxi has GDP.
Currently, the seven state-owned Coal Group's total liabilities of more than one trillion, equivalent to the volume of Shanxi Province in 2015 GDP, total assets and liabilities rate of 80%, the majority Shanxi coal debt is mostly held by banks.

..."60% in the bank, 40% bonds and the like." It is estimated that any wind, most of the debt Shanxi Coal is still the bank. But last year, banks began to transform the debt in the hands of coal, mainly to help state-owned coal group to issue bonds. Bond holders are mostly banks, insurance, trusts and other institutional investors, the fund holds a number that will eventually be held by individual investors as bond funds.
Bonds are defaulting:
 "Last week, the fund manager to call me, they are very worried." Recently, Shanxi, a state-owned bank executives either east to the Southern Weekend reporter that they bank with the help of a Shanxi coal companies underwriting the bonds, called to ask the It bondholders fund, bond fund managers care about to expire can be honored.

This is the Shanxi bond market is the most tense moments. Since April 2016, according to incomplete statistics, Shanxi coal enterprises have continuously occurred two and three cases of bond debt default suspended, revoked release event.
Coal Energy Co., a subsidiary of Shanxi Huayu April 6 announced that a sum of principal and interest of short-term financing bonds totaling 638 million yuan of non-compliance. This is the first debt default central enterprises coal, coal is China's second largest coal producer. Fortunately, near misses, after careful financing, a few days after the company to pay principal and interest in full and pay the penalty.

However, another breach of Antai Group are not so lucky. April 8, Antai Group (600408.SH) released "overdue bank debt," said the announcement from the beginning of the end of 2015, seriously affected by macroeconomic and industry situation, ING Group into a tight liquidity, bank loans overdue and constantly new increase in the whirlpool. As announced, the Company and its subsidiaries accumulated debt overdue bank loans 390 million yuan, is currently under negotiation with the creditor banks.
Shanxi banks have higher NPL rates, no surprise:
With coal and other industries with excess capacity spread risk, businesses and banks can only go hand in tide over the crisis. By the end of 2015, the balance of non-performing loans in Shanxi banking financial institutions 88.165 billion yuan, 12.362 billion yuan over the beginning of an increase, the NPL ratio 4.75%. Vice Governor of Shanxi Province Wang pointed out that a new, credit risk is approaching the warning line.
Banks can't collect on their debt for fear of setting off a chain reaction:
 According to "Shanxi Evening News" reported that Shanxi Province, the urgent need for the formation of a creditor committee jurisdiction companies a total of 233, mainly in coal, steel, coke, electricity, transportation and other leading industries.

Many respondents believe that the debt risk of Shanxi coal industry is currently focused on private corporate body, the state-owned coal group were difficult, but the risk is controllable.

" 'Creditors' committee' coordination mainly for SMEs, the five Coal Group just hang a name only." Bankers participation "creditors committee" set up Xu Xiaoping told the Southern Weekend reporter, temporary difficulties for SMEs banks will jointly support, it is difficult to save, to take debt preservation process in this way the law is mainly to prevent the peeling enterprises in debt during the default, cause losses to the bank.

For medium and large enterprises, especially state-owned enterprises, the bank will try to keep the original loan amount, increase nor decrease. State-owned coal enterprises in Shanxi bank credit line as a whole there is considerable room, for example, as of the end of September 2015, with the Coal bank credit lines total 181.2 billion yuan, 99.5 billion yuan of which there are remaining unused.

"We also want to tighten lending, but we can not do that." Xu Xiaoping explained, because a bank to close a loan, the bank will be to collect all and any state-owned enterprises fell, very likely to cause a chain reaction. "Fortunately, bank loan defaults are still OK, bond defaults are particularly serious."
Hope the creditors like having equity in coal mines.

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