Trial debt/equity swaps expected in steel, coal firms

China’s banking regulator has signaled that steel and coal firms struggling to repay debt may be the testing ground for debt-for-equity swaps, Caixin reports. According to a document from the China Banking Regulatory Commission (CBRC), asset management companies (AMCs) owned by the central and local governments are encouraged to participate in the swaps scheme by investing in the so-called “backbone enterprises” that produce coal or make steel products. China has four national AMCs all of which were established in 1999 to help state-owned banks dispose of their bad loans before they went public. From May 2012 to July, local governments have created 27 smaller AMCs, which are modeled on the national ones but focus on regional issues with fewer investment options.