UPDATE ON THE CHINA 31st JANUARY DEFAULT STORY.

Talk doing the rounds:

• The two big institutions behind the dodgy issue are going to take responsibility and bailout 1/4 of the payments each. Meaning that at least 50% will be covered.
• The regional government in Shanxi province will bailout the other 50%. 

 The product was a 498mm USD issue which was a high yielder designed to support  coal mining company which collapsed when the management was arrested.
Investors are complaining that their capital was 100%. (Hard not to laugh at this one :-D)
I had said before that it was unlikely the central government would let it default and that seems to be them working in the shadows, but this is a symptom of an ailing credit system and its likely we hear about another default very soon. I am not going to hold my breath though.