China: 4 Bonds Default in One Day, All Private Firms

The amounts aren't huge, but as the headline says, it's rate to see so many bonds default on the same day.

Sina: 罕见！一天4只债券违约 违约主体均为民营企业
Sogou: Rare! All four bonds defaulted in a day are mainly private enterprises

On July 15, a total of 4 bonds defaulted, which is rare. They are "15 Zhongcheng MTN001" of Zhongcheng City Construction, "18 Jinggong SCP003" of Jinggong Group, "17 Shengtong MTN001" of Shengtong Group and "17 Kangdexin MTN002" of Kangdexin. Among them, Jinggong Group is the new default subject since the second half of 2019. All the above 4 enterprises are private enterprises, and 2 are chemical industry.

According to the announcement of Shanghai clearing house, a total of 4 bonds defaulted on July 15. jinggong group co., ltd.' s "18 jinggong SCP003" failed to pay the principal and interest on time, which was also the company's first default bond. The failure of China city construction holding group co., ltd.' s 1.8 billion yuan middle ticket "15 middle city construction MTN001" to pay interest on time constitutes a material breach of contract. Shandong shengtong group co., ltd. was unable to pay interest on "17 shengtong MTN001" on time due to the reorganization process, and the "17 kangdexin MTN002" of kangdexin composite material group co., ltd. also failed to pay interest on time, resulting in a breach of contract.

It is worth noting that the main bodies that defaulted yesterday were all private enterprises, some of which were once the leaders of local private enterprises. The industry is still concentrated in chemical industry. Lu Wen Zhuo Li once mentioned in the medium-term bond market outlook that the interest spread of real estate, chemical industry and non-bank finance industries has widened obviously since June, while the credit interest spread of private enterprises has increased obviously. In the second half of the year, we still need to pay close attention to the continuous exposure of credit risks.


　　Jinggong Group's First Bond Default

Jinggong Group is the new default entity since the second half of 2019. Its ultra-short financing bond "18 Jinggong SCP003" failed to repay the principal and interest of RMB 1.05 billion on schedule yesterday.

As for the reasons for the default, Dagong International said in its rating report that Jinggong Group has been experiencing liquidity shortage since January 2019. As of April 17, Jinggong Group's headquarters had outstanding interest of 528,200 yuan, outstanding interest loans of 245 million yuan, bank acceptance drafts of interest, letters of credit of interest and advances of interest. A total of 535 million yuan in settled advances, including 26 settled loans of interest, 1 discount of bills of interest and 1 letter of credit of interest. The balance of external guarantees totaled 3.922 billion yuan, of which the balance of non-performing and concern categories was 481 million yuan.

Dagong International has lowered its main credit rating to AA-. In addition, Dagong also said that "18 Merits SCP004" did not have a clear source of debt repayment. Lu Wen Li Zhuo noticed that there was only one month before the next interest payment date of the bond, August 16, and there was uncertainty about whether the bond could be repaid.

Jinggong Group said that it is actively raising funds through various channels and strengthening its own operations to ensure the repayment of subsequent debts when they fall due.

According to public information, Jinggong Group is a large private enterprise in Zhejiang Province, one of China's top 500 enterprises, with three listed companies.Seiko steel structure(2.890, -0.12, -3.99%)、Kuaijishan(8.710, -0.09, -1.02%)、Refined science and technology(5.050, -0.14, -2.70%). However, in May this year, the company issued a public notice stating that due to the liability for guaranteed debts, all shares held by listed companies were frozen by the judiciary and waiting to be frozen for a period of three years.

So far Jinggong Group has not released its 2018 annual financial report.

Subject in breach of contract

Shengtong Group, Kangdexin and Zhongchengjian are all the subsequent bond defaults of the defaulting subjects. In the announcement, Shengtong Group said that the company had entered the reorganization process in March this year, so "17 Shengtong MTN001" could not repay the interest as scheduled.

According to wind information, "17 shengtong MTN001" issued a total of 500 million yuan, with an issue period of 3 years and an interest rate of 6.76% on the bonds of this interest-bearing period. currently, shengtong group's main body is rated c and the bonds of this period are rated c.

Shengtong Group said that it would continue to carry out follow-up work in accordance with the Bankruptcy Law, and at the same time continue to do a good job in information disclosure obligations.

Contex has already defaulted on four of its bonds. Yesterday, it issued a "17 Contex MTN002 Default Announcement" as well as a semi-annual performance forecast for 2019. Net profit is still a loss, ranging from 536 million yuan to 765 million yuan. But the company still has about 2.33 billion yuan of debt to pay in the next three years.

China Urban Construction has also defaulted on several bonds. This default bond "15 Zhongcheng MTN001" issued a total of 1.8 billion yuan, with the interest rate of 4.93% for this interest-bearing period. At present, the principal rating of Zhongcheng is C and the debt rating is C ..


As for the reason why the current bond fails to pay interest on time and in full, China Urban Construction said that the company's financing channels were limited due to disputes over controlling shares, which led to a very tight capital chain. According to public information, China Urban Construction is currently facing a number of debt lawsuits, and a number of financial institutions have issued rulings on the debt lawsuits and applications of China Urban Group, including Bank of Communications International Trust, Shanghai Agricultural Commercial Bank, China Shipping Trust,China life(30.130, -0.55, -1.79%)Insurance,Shanghai bank(8.850, 0.01, 0.11%)Beijing Agricultural Commercial Bank, Contractor Bank, Jiangsu Trust, etc.

China Urban Construction said that the company would continue to communicate with shareholders and raise debt service funds by means including but not limited to shareholder loans and asset disposal. At the same time, the company is also seeking to voluntarily sell some of its assets for debt repayment in accordance with legal procedures.

According to the "national business daily" report, the Beijing No.2 Intermediate People's Court will auction nearly 465 million shares of Hebei Bank, accounting for 7.75% of the total share capital of Hebei Bank, and the auctioneer is Zhongcheng Construction. (End)

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