Last-minute bailout helps firm to avoid bond default
Print Edition
A CONSTRUCTION firm narrowly avoided becoming the second company in China’s modern financial history to default on a corporate bond after a last-minute rescue by local authorities, Chinese media said yesterday.
The country’s first landmark default came in March when Shanghai-based Chaori Solar Energy Science & Technology Co failed to meet interest payments of nearly US$15 million, raising questions about Chinese debt and sparking fears others would follow suit.
Last week it looked like Huatong Road & Bridge Group could be next when it said there was “uncertainty” over payment on a 400 million yuan (US$64 million) bond, citing the absence of Chairman Wang Guorui due to his help in a probe that state media linked to corruption allegations.
Huatong issued the bond with an annual yield of 7.3 percent last July, documents filed with the Shanghai Clearing House show.
However, the company on Wednesday made full principal and interest payments of 429 million yuan, the Shanghai Securities News said, citing unnamed sources.
The firm, based in the northern Chinese province of Shanxi, used its own funds and accounts receivable from companies linked to local governments to repay the debt, a source told the paper, adding “active coordination” by authorities helped.
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