Global Investors Are Eager to Buy China's Bad Debt
Foreign investors' interest is heating up for an auction next week of bad Chinese loans, underscoring the allure of China's fledgling distressed-debt market and the dearth of opportunities to invest in it.
Up to 10 bidders, including Citigroup Inc. and Merrill Lynch & Co. of the U.S., Switzerland's UBS AG and Germany's Deutsche Bank AG, are expected to bid May 25 in China's first international auction of foreclosed and forfeited real-estate collateral. China Construction Bank, a big state-owned commercial lender, will auction apartment buildings, factories and other properties located as far north as Heilongjiang province and in the southern province of Guangdong. The properties will go on the block in three geographic pools, carrying an original face value of about US$500 million.
"I think there will be a lot of interest in this bid," said one distressed-debt banker at a U.S. investment firm preparing to place bids at the auction. "Many people are itching to get assets under management, and the CCB deal looks like the only one on the horizon."
Foreign investors, ranging from big Wall Street financial firms to small distressed-debt specialists, have spent millions of dollars to plant their stakes early in China's distressed-debt market. With an estimated $500 billion in bad-loan inventory, mostly sitting on the books of China's four biggest commercial banks, including CCB, the potential market is greater than the entire Asian corporate and sovereign bond markets combined.
But so far, there have been only two bad-debt auctions, both held by Huarong Asset Management, one of the country's four state-sponsored loan-cleanup companies. Since 1998, when the market officially opened with the state-directed establishment of the asset-management companies to help liquidate the banks' bad loans, only about $200 million has been invested by foreigners.
The bank's auction bid-date was postponed over the weekend from May 19 to give investors more time to review last-minute changes to the sales terms. The bank made "major changes" to the terms to "hopefully increase the bid price as the bank reduces the risk to investors," said China Construction's financial advisor, Jack Rodman of Ernst & Young.
According to a distressed-debt investment adviser, "it's very possible" that bidders will lower their expectations for returns on their investment -- effectively raising the prices they're willing to offer -- to win at least one of the pools. "It's a lot of cash chasing very little activity," said the adviser.
Under pressure to list its shares next year after a government bailout and ahead of a 2007 World Trade Organization deadline to open the banking industry to foreign competition, CCB has been trying innovative ways to clean up its balance sheet. This week's auction skirts a law that prohibits banks from selling nonperforming loans below their original value. The law doesn't pertain to the sale of real-estate collateral.
全球投资者抢购中国坏帐资产
外国投资者对中国下周将举行的坏帐拍卖的兴趣日益浓厚，表明中国新兴的不良资产市场的吸引力之大以及投资机会之宝贵。
5月25日，中国将首次面向国际市场拍卖罚没的以及丧失赎回权的不动产抵押品，预计届时将有至多10家竞标者，其中包括美国的花旗集团(Citigroup Inc.)和美林公司(Merrill Lynch & Co.)、瑞士的瑞士银行(UBS AG)、以及德国的德意志银行(Deutsche Bank AG)。在此次拍卖会上，中国四大国有商业银行之一的中国建设银行(China Construction Bank)将拍卖北起黑龙江、南至广东省的公寓楼、工厂及其他物产。这些物产将按所处地域分三组拍卖，原始价值约为5亿美元。
准备参与竞标的一家美国投资银行从事坏帐业务的银行家称，市场对这次拍卖充满兴趣，许多人都希望得到此类不良资产，而中国建设银行的拍卖看来是近期内唯一的机会。
这些外国投资者大到华尔街大型金融机构，小到专业的债务清理公司，他们已花费了数以百万计的美元来抢先登陆中国的不良资产市场。此市场的潜在规模甚至大于整个亚洲企业债券和主权债券市场之和，中国目前约有5,000亿美元坏帐库存，其中大部分来自中国建设银行等四大国有商业银行。
但到目前为止，中国只由华融资产管理公司(Huarong Asset Management Corp.)出面进行了两次坏帐拍卖。该公司是中国由政府资助的4家坏帐清理公司之一。这4家公司于1998年在政府指导下建立，旨在帮助清理银行坏帐，中国的不良资产市场由此正式形成，但迄今为止，外国机构在该市场的投资规模仅有约2亿美元。
中国建设银行在周末宣布，将拍卖的投标日期从5月19日向后推延，以使投资者有更多时间考虑拍卖条款的最新变化。中国建设银行的财务顾问安永(Ernst & Young)的Jack Rodman表示，该行对拍卖条款作出了重大调整，很有希望在降低投资者风险的同时提高竞标价。
一位坏帐投资顾问称，竞标方很可能降低投资回报预期，通过上调竞标价来至少标得一部分资产。他表示，目前有大量资金都对这一规模非常有限的拍卖虎视眈眈。
近期获得政府注资的中国建设银行面临著明年上市的压力，同时世界贸易组织(World Trade Organization)也要求中国必须在2007年将银行业对外开放。在这种种压力下，中国建设银行一直在尝试新的不良资产清理方式。该行即将举行的拍卖将是一种擦边球行为，因为中国有法律规定银行不得以低于原始价值的价格出售不良贷款，不过该法律不适用于不动产抵押品的出售。
