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Matt's Market Insights

 

On Friday's site I discussed worries surrounding the Wealth Management Product (WMP) called "Credit Equals Gold #1 Collective Trust," in which $500 million had been loaned to a nearly bankrupt coal mining company. Questions about whether this product would be allowed to default, or who would cover the losses have now been partially answered.

 

A "mysterious third party" has come to the rescue which will allow China Credit Trust, the issuer, to make good on its commitment to investors. At the moment it appears that investors will escape with their limbs intact, although they will miss a few interest payments and receive a lower yield than previously thought.

 

The last minute solution is likely a result of involvement by the state, and involves the third-party investor receiving an equity stake in the nearly bankrupt coal mining company. Recently this coal mining company had been granted approval to restart a closed mine, which appears ... Log in or subscribe to continue reading.


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