UBS Urges Bank Loan Restructuring to Address LGFV Crisis

What’s new: Bank loan restructurings may offer a temporary way to ease the liquidity crisis facing China’s local government financing vehicles (LGFVs), said Yan Meizhi, head of Greater China Financials at UBS Group’s Research Division.

The Swiss-based global banking giant estimated that a quarter of LGFVs do not have enough operating cash to cover interest payments on debt, though no LGFV has failed to repay a bond so far. Yan said the impact of credit extensions on banks would be manageable.