Private Equity Firms Chase Bad Debt in China

Reuters: As China opens bad debt market, private equity firms step in
Foreign distressed debt managers are building a presence in China, undeterred by an opaque legal system but equally encouraged by government steps to open up to specialised players and reduce a mountain of corporate bad debt.

New measures that include a pilot programme to securitise bad loans may only act to dent an estimated 4 trillion yuan ($620 billion) of distressed debt, but big foreign firms believe the economy's slowing growth is pressuring Beijing to allow alternative ways to reduce debt.

KKR & Co LP and Oaktree Capital Group LP, as well as niche players such as Clearwater Capital Partners and Shoreline Capital Management, have all staked out plans in China's distressed debt market.

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