Citic Pacific parent company assumes currency losses

Mining and manufacturing company Citic Pacific in Hong Kong has reached an agreement with parent company, Citic Group, to provide critical financial support to meet liabilities from the exposure to leveraged FX contracts disclosed on October 20. ( Structured Products November 2008. )

Citic Group, the state-owned investment company of the People's Republic of China, will provide a $1.5 billion (HK$11.6 billion) standby loan facility, to be replaced by the issuance of a convertible bond of the same value. This bond will convert into shares at a price of HK$8 per share. On conversion of the convertible bond, Citic Group's shareholding in Citic Pacific will be 57.6%.

Existing Australian dollar leveraged foreign exchange contracts within Citic Pacific will be used for its

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Stemming the tide of rising FX settlement risk

As the trading of emerging markets currencies gathers pace and broader uncertainty sweeps across financial markets, CLS is exploring alternative services designed to mitigate settlement risk for the FX market

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