Chinese Zombies Contemplate Debt, As Do Banks, Credit Guarantors and Trusts

The focus of debt has been on the bond and bank loan market, but there are many trusts and credit guarantee firms who are also at risk of default. The firms are a more likely vector for any potential financial contagion.
Huge debt burden to production enterprises are facing not only a heavy burden to the enterprise, the risks to various financial institutions also conducted on the rise. Pressure behavior in bad loans at the same time, to bring the risk of financial capacity is also being conducted to guarantee trusts, bonds and other financial fields.

In the "zombie" corporate credit to exit the main "battlefield" - the banking sector, a marked increase in bad debt pressure since last year. By the end of the first quarter of 2016, commercial banks' bad loan ratio rose for 18 consecutive quarters, to 1.75%. A number of listed banks in the manufacturing sector and the northeast, northwest high level of non-performing loans ratio.

In addition to two-liter non-performing loans situation appears, are not included in non-performing loans also concerns a clear upward trend. By the end of the first quarter of 2016, concern loans accounted for up to 4.01%. Commercial Bank, Nanjing Branch, general manager of the Department of a large joint-stock credit approval that the current main banks will put a lot of credit interest loans. One of the top echelon of a four asset management companies, told reporters that although the steel and coal industries bad debt rate is not high, but mostly just through new borrowing Jiujiang risk temporarily "hold up".

Pressure behavior in bad loans at the same time, the financial risk to bring production capacity there to guarantee trusts, bonds and other financial areas of conductive trend.

This year, the number of enterprises increased risk of huge debts, which in addition to the creditor banks, there are a lot of trust products. Sunan a bank insiders told reporters, Jiangsu Yixing guarantee chain, guarantee network crisis, mainly in the cable, copper and other industrial overcapacity, low profit margins, once a business break, the chain will have a crisis.
To put the debt of zombie firms in perspective, here another stat from this article, the one time cost of relocating a worker.
Party secretary of a large steel enterprise said that even with 20,000 employees, if one-time worker costs are 100,000 yuan per worker, resettlement costs are but 2 billion yuan, compared with more than 30 billion in debt, it's obvious which problem is easy and which is serious.
People's Daily: 僵尸企业坏账压力传向银行担保信托 专家献计

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