Trust Defaults Rising

East Money: 中信信托再遇违约 信托业兑付压力大增
At the end of May, a temporary information disclosure report of CITIC Trust triggered a trust default warning.

This interim report shows that CITIC Trust launched the “Beijing CITIC Golden Loan Collective Funds Trust Plan” (hereinafter referred to as “Changtian 2”) established on May 4, 2017 to the Beijing Gold Exchange Center. Co., Ltd. (hereinafter referred to as "Beijing Gold") issued 545 million yuan in trust loans. It was originally scheduled to repay principal and interest on May 4, 2018, but after the expiration, neither the principal nor the interest of 10 million yuan was paid, which constituted a substantial breach of contract. The Times Weekly reporter sent this question to CITIC Trust for an interview outline. As of this writing, no reply was received.

This is the second breach of trust project that CITIC Trust broke out in May this year. Two weeks ago, CITIC Trust’s “Second Interim Information Disclosure Report on the CITIC Kabitan 2nd Loan Collective Fund Trust Plan (hereinafter referred to as “Kaifong 2”) was exposed by the media. The report prompts the beneficiaries that the TianFang Group may The default risk of failing to repay loan principal and interest as scheduled. Shortly after receiving media attention, the Kaaba Group wrote to CITIC Trust that it will repay on schedule.

In addition to the two cases of trust default mentioned above, at least 12 trust products have been delayed or unable to be redeemed this year.
The trust industry has 18 trillion yuan in assets.
At the moment of the transformation of the trust industry, improving the proportion of active management capabilities and active management scale is one of the mainstream ways of transition. However, according to the data released by the China Trust Industry Association, the size of the passively managed trust assets in the trust industry rose in both increments and growth rates in 2017.

According to data from the Trust Industry Association, the size of the passively managed trust assets of the 68 trust companies reached 18.44 trillion yuan at the end of 2017, an increase of 5.05 trillion yuan from the end of the previous year, and the ratio of passive management to total trust assets was 70.18%, an increase of 4 percentage points from the end of last year.
Maturing trusts will jump 32 percent this year:
According to statistics, at least 12 trust products have been delayed or unable to be redeemed this year. On the other hand, the increase in the scale of maturity also makes the industry pay more. Statistics show that the total maturity of trust products in the first five months of this year was 209.6 billion yuan, an increase of 40.48% compared with the same period of last year. There will be about 4.1 trillion yuan worth of trust products due to expire within the year, an increase of 31.59% year-on-year.

..."2018 is a credit year." Guotai JunanThe research report of the fixed income research team of the securities company stated that this year, the corporate financing environment was significantly tightened, and non-standard, credit, and bond issuance rates have risen sharply. Affected by regulatory impacts and returns, corporate refinancing sources have turned to banks.The dependence on credit and trust non-standard continues to decline, and the dependence on the credit bond open market continues to rise, leading to a significant increase in credit risk exposure in the market.

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