China's banks wonder where to put their money

Bank of China in Singapore
Wikipedia The story that Chinese banks are pulling out of US investments like Fannie and Freddie is not limited to the Bank of China, writes the WSJ, but is happening along the line.

Amid jitters about the future of Fannie Mae and Freddie Mac, China's four biggest listed banks have pared back their holdings in debt related to the two U.S. mortgage giants. At the end of June, the four banks held a combined $23.28 billion of debt issued or guaranteed by Fannie and Freddie. That's a small fraction of the trillions of dollars outstanding, but the reductions attracted interest as a possible gauge of broader sentiment toward such securities.

The next dilemma: where to put the money next? The four banks have about USD 460 billion in funds available, with the Bank of China as the largest player. Syndicated loans for Chinese companies moving overseas is one good option, analysts say in the WSJ.

Bank of China set up three centers earlier this year to manage its syndicated-loan business around the world. It has been involved in a handful of small but noteworthy syndicated-loan deals, including a $592 million deal in Indonesia in which it led a group of 17 other banks to finance a power project. Its BOC Hong Kong (Holdings) Ltd. unit participated in a planned $3 billion refinancing facility for telecom operator PCCW Ltd.

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