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China Construction Bank inks 30B yuan debt-to-equity deals

Banking Essentials Newsletter December Edition Part 2

Banking Essentials Newsletter - November Edition

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery

China Construction Bank inks 30B yuan debt-to-equity deals

China Construction Bank Corp. signed debt-to-equity swap deals worth 30 billion yuan with state-owned coal and steel firms, Reuters reported Dec. 29, citing the Xinhua News Agency.

The bank signed the debt-to-equity framework agreement with Huainan Mining Industry (Group) Co., Huaibei Mining Group and Magang (Group) Holding, the parent of Maanshan Iron & Steel Co., to reduce leverage and boost profit. The bank will also extend 30 billion yuan worth of credit to Huainan Mining Industry, Huaibei Mining and Wanbei Coal-Electricity Group within the next five years.

Chinese lenders have been rushing to enter deals with state-owned enterprises since the country relaunched the debt-to-equity scheme in October. Industrial & Commercial Bank of China Ltd., for instance, recently signed debt-to-equity swaps worth 30 billion yuan with state-owned coal and steel firms.

Like some of its peers, China Construction Bank has proposed to set up an asset management unit specializing in market-driven debt-to-equity swap business. The unit will mainly conduct financial business such as the acquisition of relevant debt rights, equity investment and converting debt into equity, among others.

China Construction Bank, Huainan Mining, Huaibei Mining, Wanbei Coal-Electricity Group and Magang (Group) Holding were not immediately available to comment on the matter, Reuters reported.

As of Dec. 28, US$1 was equivalent to 6.95 Chinese yuan.