China's State Council released new measures to further reduce leverage levels at state-owned companies, China Daily reported Feb. 7.
State-owned enterprises and debt-ridden "zombie enterprises" will continue to be a priority in the deleveraging campaign, the council said.
A statement released after an executive meeting chaired by Premier Li Keqiang said the government will provide stronger support for debt-to-equity swaps and mixed-ownership reforms. Capital levels at corporates can be replenished through share offerings and by bringing in strategic investors through mixed-ownership schemes.
One key measure involves greater private capital participation in debt-to-equity swaps of state-owned enterprises. Equity investment institutions will be encouraged to establish private equity funds focused on debt-to-equity swaps.
Meanwhile banks, state capital investment companies and insurers will participate through their existing units and new departments for this purpose.
The council noted positive progress was made in 2017 to reduce debt. The debt-to-asset ratio of industrial enterprises with annual turnover of more than 20 million yuan dropped to 55.5% at the end of 2017, from 56.1% a year prior, China Daily reported.
The ratio for state-controlled companies was at 60.4%. No comparable figures were given.
As of Feb. 7, US$1 was equivalent to 6.27 Chinese yuan.
