Global fund managers are increasingly drawn and putting more money into China’s sour loans and distressed assets, lured by the possibility of posting attractive profits.
According to Bloomberg, a number of fund managers are raising money, buying distressed debts and investing in firms engaged in giving advices on asset recovery. Shoreline Capital Management, for instance, raised $500 million that it would invest in a distressed debt vehicle, its third since 2004.
China Cinda Asset Management, one of the top state-ran asset managers in the country, posted a 56% rise in income from distressed and credit-related assets, the Bloomberg report said.
“Many institutional investors have been attracted by the reported profit of Cinda,” Bloomberg quoted Victor Jong, a partner in PricewaterhouseCoopers LLP’s business recovery services unit in Shanghai, as saying. “The trend is clear, there will be even more activity” in distressed loans.
China’s slowing economy has made it difficult for companies to pay their debts on time. The situation is exacerbated by the government’s policy of not offering any aid to these borrowers.
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