From Bloomberg (article here: Yuan Loan-Backed Bond Surge Prompts China Risk Warnings):

  • Chinese banks are selling notes backed by loans at a record pace as they seek to offset a slump in deposits
  • Prompting credit analysts to warn of the risks of securities that sparked the global financial crisis
  • Lenders have issued 148.7 billion yuan ($24.2 billion) of collateralized debt obligations this year, almost five times what’s been sold since 2012 when a ban on the securities was lifted Bloomberg data show
  • China is experimenting with new types of securities at a time when deposits are dropping at a record pace and soured debt is rising amid a property slump
  • “Because most asset-backed securities investors are banks, securitization doesn’t help lower the lending risks the whole banking system is exposed to,” said Li Ning, a bond analyst in Shanghai at Haitong Securities Co., the nation’s second-biggest brokerage. “The risks one bank issuer faces are simply transferred to the bank investor.”

More detail at the article

H/t @ChrisWeston

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Something else to weigh on the AUD ….