China liberalisation crucial for keepwell deeds

Although the enforceability of keepwell agreements remains untested in a restructuring scenario, the credibility of these credit support structures is improving.

China liberalisation crucial for keepwell deeds

The liberalisation of China’s markets is offering hope to an area of finance for mainland groups that has hitherto drawn caution from investors the keepwell deed.

Keepwell deeds are essentially a contract between a parent company and its subsidiary to maintain solvency and financial backing throughout the term set in agreement typically involving an offshore group company issuing debt, with credit support provided by the onshore group or third-party.

These structures were...

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