As One Default Averted, Another Arises

Default whack-a-mole is underway.
Kaisa Back From Brink of Default With Sunac Stake Purchase Deal
Three days before the end of a grace period for Shenzhen-based Kaisa to repay $23 million of interest on a bond, Sunac China Holdings Ltd. said it agreed to buy 49.3 percent of the troubled developer.

...“If Kaisa collapses, there’s no winner,” Sun said in an interview at Kaisa’s headquarters in Shenzhen, a southern Chinese city that borders Hong Kong. “But if it’s done well, it’s a win-win” deal, he said.

Sunac, which is among the top five developers in Shanghai and its hometown of Tianjin, is buying the stake from Kwok’s family trust. The acquisition would be an opportunity for the company to expand into southern China, Sun said
On the very same day, another default situation emerged.

This debt in question was issued by 安徽蓝博旺机械集团, or NBO Group/NBO Forklift, in two bond issues sold in 2013. The first bond comes due on February 4, 2015, and the company doesn't have the funds to pay principal or interest.

These bonds are dubbed "2+1" because it gives the bondholder the right to demand payment of principal and interest after two years.
The so-called "2 + 1" structure and these institutions who said the "exercise", that is to give the bondholders at the two-year period to the early termination of the credit relationship, requires issuers advance payment of principal and interest on the previous two years. Because the two bonds are "2 + 1" structure, the exercise date are approaching, but then broke the main aspects of the issuer overdue debt, cash flow is more intense, limited assets and Litigation, guarantor promises broken and other issues, two only bond default risk is almost a foregone conclusion.
Worthless credit guarantees are back in the news after a brief hiatus.

In the Sohu article on the same news, analysts say 2015 may be the year of year of peak private debt defaults, due to the amount of debt issued from 2012 on.
SME private debt alone has more exposure to the risk of default, including the "13 Chinese beads debt", "Jin BBDO 12", "12 Kim Tae debt", "13 Sen debt" since 2014, "12 Walters," and so on, defaulted. However, 2015 default cases could be much higher than 2014.   

"This is the test of SME private debt since the 2012 trial, from June 2012 issued the first. Because most of the private debt term for 2-3 years, in 2015 or are private debt default peak, preventing private debt defaults could become a big story in 2015." Minsheng Securities bond market analyst Li Jilin told the reporter.

Compared to corporate bonds, a big reason for for private debt defaults is there are many illegal operations. An SME creditor Cheng Renshi told reporters, "If you really do things strictly according to regulations, most private debt cannot be issued, and in fact there is a lot of financial problems, including the secured party doesn't exist, so there are many problems. "   

Li Jilin said that private debt default also has a lot to do with current economic conditions and the business climate, "he degree of prosperity in the industry affects firms ability to generate cash flow. Issuer NBO Group is in the machinery, equipment and instrumentation industry, the whole industry is facing the problem of overcapacity, inventory is difficult to reduce, easily leads to obstacles to cash flow recovery."

21CBH: 12蓝博债违约在即 发行人:“行权就没钱”
Sohu: 12蓝博债确认违约 年内或现私募债违约高峰

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