Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

China Huarong Asset Management / Equity Bottom-Up

*Already On Edge:  Again in mainland China, there have been rumblings of another credit default over the past several days. The CBIRC disclosed that China Huarong Asset Management (2799.HK) [Huarong] is actively working with its auditor to complete its annual report. The issue appears to be Huarong’s legacy exposure associated with the misdeeds of its former Chairman, which still need to be addressed post-removal in 2018; and *Another Audit Delay: Huarong is delaying its 2020 earnings results beyond the April 30, 2021 deadline, which, in our view, only exacerbates concerns over a potential Huarong default. Ironic, given that Huarong was supposed to help mainland China clean up its bad debt mess. This further delay will not help bond liquidity which already appears to have disappeared. Contagion risk remains a real threat as bondholders likely sell other holdings.

*Already On Edge:  Again in mainland China, there have been rumblings of another credit default over the past several days. The CBIRC disclosed that China Huarong Asset Management (2799.HK) [Huarong] is actively working with its auditor to complete its annual report. The issue appears to be Huarong’s legacy exposure associated with the misdeeds of its former Chairman, which still need to be addressed post-removal in 2018; and *Another Audit Delay: Huarong is delaying its 2020 earnings results beyond the April 30, 2021 deadline, which, in our view, only exacerbates concerns over a potential Huarong default. Ironic, given that Huarong was supposed to help mainland China clean up its bad debt mess. This further delay will not help bond liquidity which already appears to have disappeared. Contagion risk remains a real threat as bondholders likely sell other holdings.

China Huarong Asset Management  - This Can’t Be Good

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE:  Intouch, Toshiba, Orocobre/Galaxy, Tilt, Primewest/Centuria, Huarong

China Huarong Asset Management / Event-Driven

<div>
<a href="https://www.smartkarma.com/entities/china-huarong-asset-management" target="_blank" data-smartkarma-citation="entities:968:1" rel="noopener">China Huarong Asset Management (2799 HK)</a> was<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0401/2021033101720.pdf" target="_blank" rel="noopener"></a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0401/2021033101720.pdf" target="_blank" rel="noopener">suspended</a> on the 1 April 2021 after failing to despatch its 2020 annual report. It remains suspended.
Yet the bigger issue was the distressed asset manager's US$22bn of dollar-denominated bonds. 
A damaging commentary from Caixin Media last week speculating of a possible bankruptcy sent some of Huarong's bonds into free fall. The near-dated 2022 bonds touched a low of 67.7 cents. The 4.5% perps dipped below 50 cents.
The 2022 3.375% bonds
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/202/156/original/image_18891551441619084449487.png?1619084450" class="editor-image img-responsive" data-smartkarma-image-id="202156"></figure>
The 4.5% perpetual bonds
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/202/155/original/image_58242332231619084400903.png?1619084401" class="editor-image img-responsive" data-smartkarma-image-id="202155"></figure>
In <a href="https://skr.ma/Q1rV4" target="_blank" rel="noopener">China Huarong Asset Management (2799 HK): This Is Manageable</a>, I reckoned a systematic restructuring process was a more likely outcome here as opposed to a less-than-optimal major debt restructuring.
Reportedly the central bank is now considering taking on RMB100bn of assets from Huarong, towards refocusing the company on distressed debt. Under "recently departed" Lai Xiaomin, Huarong expanded well beyond its original mandate of managing distressed debt.
I thought the bonds at ~70c looked interesting. That was the right call though it has been bumpy.
More below the fold.
</div>
<hr>
The title hijacks Wellington's comment about Waterloo, wherein he said: "A damned nice thing ... the nearest-run thing you ever saw in your lif


China Huarong Asset Management (2799 HK) was suspended on the 1 April 2021 after failing to despatch its 2020 annual report. It remains suspended.
Yet the bigger issue was the distressed asset manager's US$22bn of dollar-denominated bonds. 
A damaging commentary from Caixin Media last week speculating of a possible bankruptcy sent some of Huarong's bonds into free fall. The near-dated 2022 bonds touched a low of 67.7 cents. The 4.5% perps dipped below 50 cents.
The 2022 3.375% bonds

The 4.5% perpetual bonds

In China Huarong Asset Management (2799 HK): This Is Manageable, I reckoned a systematic restructuring process was a more likely outcome here as opposed to a less-than-optimal major debt restructuring.
Reportedly the central bank is now considering taking on RMB100bn of assets from Huarong, towards refocusing the company on distressed debt. Under "recently departed" Lai Xiaomin, Huarong expanded well beyond its original mandate of managing distressed debt.
I thought the bonds at ~70c looked interesting. That was the right call though it has been bumpy.
More below the fold.


The title hijacks Wellington's comment about Waterloo, wherein he said: "A damned nice thing ... the nearest-run thing you ever saw in your lif

China Huarong Asset Management (2799 HK): Not A Near Run Thing

*Another Potential Default:  Again in mainland China, there have been rumblings of another credit default over the past several days. The CBIRC disclosed that China Huarong Asset Management (2799.HK) [Huarong] is actively working with its auditor to complete its annual report. The issue appears to be Huarong’s legacy exposure associated with the misdeeds of its former Chairman, which still need to be addressed post-removal in 2018; and *Ratings Agencies Are More Than Culpable: Wouldn’t you know it, the sleepy, fee hungry ratings agencies (Standard &amp; Poors, Moody’s, and Fitch Ratings) finally put Huarong on review for a potential downgrade. C’mon guys, where have you been?

*Another Potential Default:  Again in mainland China, there have been rumblings of another credit default over the past several days. The CBIRC disclosed that China Huarong Asset Management (2799.HK) [Huarong] is actively working with its auditor to complete its annual report. The issue appears to be Huarong’s legacy exposure associated with the misdeeds of its former Chairman, which still need to be addressed post-removal in 2018; and *Ratings Agencies Are More Than Culpable: Wouldn’t you know it, the sleepy, fee hungry ratings agencies (Standard &amp; Poors, Moody’s, and Fitch Ratings) finally put Huarong on review for a potential downgrade. C’mon guys, where have you been?

China Huarong Asset Management  - Ratings Agencies Fail Us Again

Last Week in Event SPACE: Toshiba, Grab, Huarong, Invesco Office, Intouch, Jardines

China

China Huarong Asset Management Co Ltd. provides a variety of financial services. The Company offers asset management, banking, securities services, financial leasing, trust services, and investment services. China Huarong Asset Management maintains branch locations throughout China.

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China Huarong Asset Management (2799 HK)

China Huarong Asset Management - This Can’t Be Good

CHINA HUARONG ASSET MANAGEMENT: Huarong is delaying its 2020 earnings results beyond the April 30, 2021 deadline, which, in our view, only...

Thomas J. Monaco

Last Week in Event SPACE: Intouch, Toshiba, Orocobre/Galaxy, Tilt, Primewest/Centuria, Huarong

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett