Bulletin: China Cinda's Capital Position Can Cushion Asset Quality Risk

HONG KONG (S&P Global Ratings) March 28, 2024--China Cinda Asset Management Co. Ltd.'s asset growth will likely remain modest over the next 24 months. This will help the Beijing-based distressed asset manager preserve capital amid strains from the country's prolonged property crisis. China Cinda's (BBB+/Stable/A-2) full-year results for 2023 were largely within our expectation. We estimate leverage (ratio of debt to adjusted total equity) for the nonbank segment, which is dominated by the core distressed asset management business, was broadly stable at end-2023 compared with 4.7x at end-June 2023. The company's effort to trim risky restructured distressed assets (RDA) led to a 41% decline in RDA balance and a 1.3% dip in total assets in 2023. This partially alleviated pressure

...March 28, 2024 HONG KONG (S&P Global Ratings) March 28, 2024--China Cinda Asset Management Co. Ltd.'s asset growth will likely remain modest over the next 24 months. This will help the Beijing-based distressed asset manager preserve capital amid strains from the country's prolonged property crisis. China Cinda's (###+/Stable/A-2) full-year results for 2023 were largely within our expectation. We estimate leverage (ratio of debt to adjusted total equity) for the nonbank segment, which is dominated by the core distressed asset management business, was broadly stable at end-2023 compared with 4.7x at end-June 2023. The company's effort to trim risky restructured distressed assets (RDA) led to a 41% decline in RDA balance and a 1.3% dip in total assets in 2023. This partially alleviated pressure on leverage build-up. In our view, China Cinda's asset quality will remain a weak spot. The ongoing stress in China's property sector will continue to pose challenges to the company's profitability....

Bulletin