People are starting to talk about a new danger in the Chinese financial system: asset-backed securities (ABS).
China’s trust companies have started buying ABS at a stunning rate, and with the same vigor with which they once bought infamously dangerous wealth management products (WMP), which are now on the decline.
As the Chinese economy moves from one based on investment to one based on consumption, corporate margins have thinned. China’s producer price index is at its lowest level since October 2009. Already this year we’ve seen massive Chinese property developer, Kaisa, default on bond payments.
Now it looks like that debt is being repackaged and shipped around to investors at the worst time possible.
Business Insider UK –Linette Lopez Mar. 9, 2015, 5:01 PM