Simple Solution to China's Toxic Debt Problem

June 2, 2016
Bloomberg: China Toxic Debt Solution Has One Big Problem

“We don’t have enough domestic institutional investors with the expertise to price such complex products,” said Ming Ming, Beijing-based head of fixed-income research at Citic Securities Co., China’s largest brokerage.

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“Lack of qualified investors, especially in the junior tranche, will make it hard for banks to sell NPL-backed securities and constrain their development.”

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The problem is that most Chinese insurers, trusts, brokerage firms, and mutual funds lack the expertise to invest in bonds backed by bad loans, according to Luo Yi, a Shenzhen-based analyst at Huatai Securities Co.

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Cramer's Wachovia Autopsy (2008)


Wachovia

Exposed to risky loans, such as adjustable rate mortgages acquired during the acquisition of Golden West Financial in 2006, Wachovia began to experience heavy losses in its loan portfolios during the subprime mortgage crisis.

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