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May 6, 2016

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Baoding Tianwei may miss bond payment

A Chinese solar equipment firm, Baoding Tianwei Yingli New Energy Resources Co, said it may miss payment on a 1.4 billion yuan (US$215.2 million) five-year note maturing next Thursday.

The unlisted firm, a subsidiary of New York-listed Yingli Green Energy Holdings Co, cited straight losses as the reason for the potential default. It issued the warning in a statement posted on China’s interbank bond market operator’s website.

Prices for solar power equipment have fallen rapidly in recent years, causing financial problems for several manufacturers. China’s first public bond default in 2014 was by Chaori Solar.

Bond defaults have been rising in China over the past year and a half, with around 20 firms facing repayment trouble in 2016. Defaults have been concentrated in industries with overcapacity such as steel and cement, but firms in a wide range of sectors have now defaulted as the economy has slowed.

Onshore bond yields rose rapidly in April as investors eyed rising defaults amid less aggressive moves by the central bank to boost the economy following better-than-expected economic data. Chinese firms delayed or canceled over US$15 billion of new bond issuance in April.


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