Saturday, December 14, 2019
 
Columnist
Martin Hennecke

Two firms miss US$500m bond repayments
 
04/12/2019
 
Two Chinese companies failed to repay bonds worth a combined half a billion dollars on Monday, underscoring rising debt risks in the highly leveraged nation as the economy slows. Peking University Founder Group was unable to secure sufficient funding to repay a 270-day, 2 billion yuan (HK$2.22 billion) bond, according to a company filing to the National Interbank Funding Center. Tunghsu Optoelectronic Technology also failed to deliver repayment on both interest and principal on a 1.7 billion yuan bond, according to Shanghai Clearing House. The quickening speed of bond defaults in China, especially among ailing private firms, highlights the growing financial strain triggered by the country's worst economic slowdown in three decades and unabated trade tensions with the United States. Last week, industrial firm Xiwang Group failed to pay a 1 billion yuan bond, missing a fresh repayment deadline on an already defaulted bond. "It's getting harder for companies to get funding help when facing a debt crisis unless they're centrally-controlled companies and local state-owned enterprises that have great importance to the local economy," said Yang Hao, fixed income analyst from Nanjing Securities. Private sector firms accounted for more than 80 percent of total defaults this year, according to Bloomberg-compiled data.

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