Working Through the Crisis Checklist: Largest Dollar Bond Default

Bloomberg: China Suffers Biggest Dollar Bond Default By State-Owned Company in Two Decades
A major Chinese commodities trader became the biggest dollar bond defaulter among the nation’s state-owned companies in two decades, in a moment of reckoning for Beijing as it struggles to contain credit risk in a weakening economy.

Tewoo Group Corp. announced results of its unprecedented debt restructuring, which saw a majority of its investors accepting heavy losses. This is expected to reshape investors’ perceptions about government-owned borrowers whose identity has for years offered a relatively strong sense of security.

It’s also seen offering a road-map for resolving similar debt crises in the future as the prospect of more failures by state-backed firms looms.

The one-time Fortune Global 500 company from the northern port city of Tianjin said dollar bond investors representing 57% of the the total $1.25 billion have agreed to be paid just 37 to 67 cents on the dollar, depending on the maturity of the debt.
Eurodollars went to money heaven.
Tewoo’s failure in the dollar bond market, the biggest for a Chinese SOE since the collapse of Guangdong International Trust and Investment Corp. in 1998, is a sign that the worst economic slowdown in three decades is limiting Beijing’s capacity to bail out its weaker state firms.
China's early 2000s bailout was trivially easy. It was 4th grade math easy. Bank balance sheets vs govt balance sheets and GDP growth rate. The govt could easily afford a huge bailout. This time, growth is slowing and the govt balance sheet cannot expand without negative impact on the wider economy.

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