IMF Says China Debt Swap, NPL Securitization Could Create More Problems

Recent suggestions to solve China’s massive corporate debt through swaps and securitization are grabbing headlines, but the measures could make the problem worse, experts at the International Monetary Fund (IMF)said in a blog post on Tuesday.

China’s bulging private debt pile has come under scrutiny in recent months as the world’s second-largest economy continues to slow. The IMF estimates corporate debt in China at 160 percent of GDP, “which is very high compared to other, especially developing, countries,” the IMF’s James Daniel, Jose Garrido and Marina Moretti wrote in a blog post on Tuesday.

Rating agencies Moody’s Investors Service and Standard & Poor’s have taken note: both trimmed the outlook on China’s sovereign debt rating to negative last month.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam