Distressed Debt In China: The Worst Is Yet To Come, DAC Management Says

The worst could be yet to come for distressed debt in China, according to DAC Management, according to a report from Bloomberg.

Bad debts in China are “well underestimated” as a result of Chinese authorities persistently propping up weak firms and bailing out local investors, according to DAC Management, as Bloomberg reports.

DAC Management, a Chicago-based asset management and advisory firm, whom focuses on distressed credit in China, says that the worst is to come and that there will be a lot of opportunities for debt traders, according to Bloomberg.

 “They keep reporting such a low number for so many years, there’s only one way it can go — up,” said Philip Groves, DAC co-founder, during an interview with Bloomberg on Wednesday.

“We’ve yet to see it because if you look at corporate defaults, they keep getting covered by the government. At some point, they can’t cover every single one,” Groves said.

Source: Bloomberg