Today’s debt sale will whet the appetites of investors with a taste for exotic assets. Bank of China and China Merchants Bank will issue $81m in bonds composed entirely of non-performing loans. It is the first time since 2008 that China has let banks sell securities backed by their failed assets. If the sale goes well, more will follow. Officially, less than 2% of banks’ loans are bad, but analysts think the real ratio is at least triple that and rising as the economy slows. To safeguard their balance-sheets, China’s state-owned banks must offload their problematic assets. If the bonds are cheap enough, private investors and even foreign firms will be tempted. But the banks want to avoid big losses. Other government-owned firms—less sensitive to price, more sensitive to political duty—are thus the likeliest buyers. China Inc will shift its bad loans from one pocket to another.