More Chinese firms unveil debt swaps as Beijing struggles to reduce leverage

... The guidelines for debt-to-equity swaps, mooted as one solution to China's growing corporate debt overhang, have been in development for months.

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The government will take a multi-pronged approach to cutting company debt, including encouraging mergers and acquisitions, bankruptcies, debt-to-equity swaps and debt securitization, according to the guidelines issued by the State Council, China's cabinet.

State-owned metals trading giant Sinosteel was the first firm to receive approval for a debt-to-equity swap this year, according to online financial magazine Caixin, later confirmed by one of Sinosteel's subsidiaries.

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Chinese companies sit on $18 trillion in debt, equivalent to about 169 percent of gross domestic product (GDP), according to the most recent figures from the Bank for International Settlements. Most of it is held by state-owned firms.