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China To The Rescue

11 June 2018 by lberuti

GNW ( Genworth Financial Inc ) offers insurance, wealth management, investment and financial solutions. It products covers mortgage guaranty, life insurance and long-term care insurance. After it repaid its bonds that came due in May, analysts estimated that the company was left with only $560mln of cash while it faces $1.6Bln of debt maturing in 2020-2021. Since October 2016, GNW has been working on clearing its proposed takeover by China Oceanwide. The transaction was recently revamped to include a $1.5Bln capital contribution that would be used mostly to repay GNW’s debt. News over the week-end that the Committee on Foreign Investments in the United States approved the deal after concluding that there are no unresolved security concerns came as a major relief to debt holders. It significantly increases the possibility that GNW’s $2.7Bln sale will go through, which would effectively put the issue of GNW’s bankruptcy that has been on investors’ mind off the agenda. GNW’s 5-year risk premium decreased by 200bps to 425bps, the tightest it has been since mid-2015.