Daisy Chain Explodes: PE and Trust Funds Default Due to Hebei Credit Guarantee Default

Hebei Financing Investment Guarantee (HFIG) has set off a slowly exploding daisy chain following its default earlier this year.

October 26, Wo Chuan Equity Investment Fund Management (Shanghai) Co., Ltd. announced that, due to the Hebei voted to suspend all financial guarantee business, a number of trusts, private equity products are or have been a breach of contract, rigidity cash tremendous pressure. Initiated the establishment of Hebei Rong Investment Property Investment Development Fund, with effect from October 14, 2015 has come due, since Hebei Rong Investment Holding Group Co., Ltd., Hebei Construction Investment Group Co., Ltd. is a managed fund transferee "financial investment business center" office building contract beneficiary, Hebei Rong Investment Properties Limited expiration unable to repurchase, redemption fund will be affected,
iFeng: 河北融投“血案”持续发酵 私募基金遭遇兑付危机

A few days earlier, FT reported Beijing funds went bust as well: Beijing investors protest against debt defaults
Global Wealth channelled loans to about 10 private companies in Hebei province, with the loans backed by guarantees from Hebei Financing Investment Guarantee, one of China’s largest state-owned guarantors, which collapsed earlier this year. Hebei Financing owes Rmb620m ($98m) to Global Wealth, financial news group Caixin reported this month.

Several of the protesters, who were preparing a petition to deliver to the Hebei provincial government’s office in the capital, said they would not have invested had the products not carried a guarantee.

“We gave great weight to Hebei Financing’s guarantees,” said one, who decided against giving his name as police arrived. “We knew it had the backing of the state.”

“This is a question of government credibility,” said a second investor, who identified himself only as Frank.

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