Date
23 November 2017
Huatong Road & Bridge Group is struggling to meet repayment obligations on its debt, raising the possibility of a second default in the Chinese bond market. Photo: Bloomberg
Huatong Road & Bridge Group is struggling to meet repayment obligations on its debt, raising the possibility of a second default in the Chinese bond market. Photo: Bloomberg

China faces second default in onshore bond market

China faces the second default in its onshore bond market as a Shanxi-based construction firm has warned that it may fail to make a payment next week, Bloomberg News reported Thursday.

Huatong Road & Bridge Group Co. could miss a 400 million yuan (US$64.5 million) note payment due July 23, the company was quoted as saying in a filing to the Shanghai Clearing House Wednesday.

Chairman Wang Guorui is said to be assisting authorities with an official investigation. Wang was removed from the Chinese People’s Political Consultative Conference Shanxi Committee on July 9 for suspected violations of the law, media reports said last week.

Shanghai Chaori Solar Energy Science & Technology Co. marked China’s first onshore corporate bond default when it missed a coupon payment in March this year.

Huatong Road would be the first to fail to pay both interest and principal, and would also be the first default in the interbank note market, the report noted.

The company said it is exploring various channels to raise funds to pay off the one-year bond. It will owe 429.2 million yuan in interest and principal by the due date, according to the report. 

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RC

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