Insolvencies are to increase in China this year, with traders facing greater challenges than ever in accessing finance

Philip Gilligan was interviewed by Global Trade Review (GTR) regarding the rise in Chinese insolvencies and its effect on the trade and commodities sector.

According to GTR, companies have been struggling to get the finance they require to trade, and in the worst-case scenarios, going under. However there are new players hoping to gain a foothold in the market in recent months, providing loans to subsidiaries of Chinese companies based offshore in Hong Kong.

Philip commented, “We’ve had one US bank come in saying they’re planning to start pre-payment financing, the market is not closed. Some banks are going out, but others – all the PRC banks, funds are really coming in and others that you might immediately expect are coming in.”

The involvement of funds in the commodity pre-payment space is, says Philip, relatively new and so it’s unclear just how much due diligence is taking place. However, in the deals he has seen first-hand, the documentation has been satisfactory.

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