China bad debt bank to IPO in Hong Kong

Here's what experts say.

Cinda Asset Management Company, one of China's state-owned asset management companies or bad debt banks created to buy non-performing loans, is widely expected to apply to go public in Hong Kong next month.

Sources said the Cinda IPO could raise from US$2.5 billion to US$3 billion.

Some analysts are surprised at the Cinda IPO since the company is widely considered a “junk pile” that is basically insolvent. The only thing preventing Cinda from going under is implicit government backing. Others believe Cinda could consider spinning-off the other healthier businesses and listing them.

Cinda remains largely a bad bank with a significant part of its operations revolving around nonperforming loans. It has, however, acquired licenses to operate other businesses.