The first potential default in China’s fast-growing corporate bond market offers a test of whether Beijing will allow a long-taboo practice as it seeks to rein in runaway credit: corporate failures.
A deeply indebted Shanghai solar-equipment maker late Tuesday warned that it won’t be able to meet interest payments totaling 89.8 million yuan ($14.7 million) due on Friday on a bond sold two years ago, citing a cash squeeze and its inability to raise enough funds in time.
The potential default by Shanghai Chaori Solar Energy Science & Technology Co., though small, would mark the first time a Chinese company has defaulted on a bond traded in the mainland, according to Moody’s Investors Service. Phones at the company rang unanswered on Wednesday, and an investor relations employee’s mobile phone was turned off.
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Lingling Wei, Wall Street Journal via CHINA US Focus http://ift.tt/1e1Z6rm
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