BoA: China's Debt Swap Is A Bad Idea

BoA: China's Debt Swap Is A Bad Idea

Caixin reported at the beginning of this week that the Chinese government may allow banks to swap Rmb1 trillion debt to equity over the next three years in what’s believed to be an attempt to help the country’s corporate sector deleverage.

According to a report on the topic from Bank of America Merrill Lynch, while this initiative may have been put in place with good intentions, it is another kicking-the-can-down-the-road program and may ultimately lead to more zombie companies, higher bad debts . . .

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