Baoding Tianwei Baobian Electric Co., a unit of China South Industries Group Corp., has become China’s first state-owned company to default on domestic debt.
The power-equipment manufacturer failed to make an 85.5 million yuan (US$13.8 million) bond interest payment due Tuesday after suffering a huge loss last year, the Wall Street Journal reported.
In a statement posted on the China bond clearing house website, the company was quoted as saying that it was unable to raise enough funds to make the payment.
Baoding Tianwei said it lost 10.1 billion yuan in 2014 mainly as a result of its new-energy businesses.
The company had in 2011 issued a 1.5 billion yuan note that will fall due in April 2016. The bond carries an interest rate of 5.7 percent, according to the report.
China’s first corporate default involving domestic bonds occurred last year, when Shanghai Chaori Solar Energy Science & Technology Co. missed interest payments valued at 89.8 million yuan.
Recently, property developer Kaisa Group Holdings said it defaulted on interest payments on its offshore bonds. The company has been negotiating with its creditors to restructure its debts.
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