For years, China’s biggest borrowers relied on accounting alchemy to prop up their balance sheets. Those days are over. Corporate perpetual bonds have almost always been recognized by Chinese auditors as equity, not debt. That enabled state-owned enterprises to borrow billions of dollars without it showing up that way. As part of its effort to shine a light on hidden debt, the Ministry of Finance earlier this year announced changes to its treatment of such securities. Now more than $360 billion worth of bonds could be reclassified as liabilities. Of the 1,227 perpetual notes outstanding, almost all are issued by ... (full story)