Sichuan Coal 1 B Default Imperils 2 B Subsidiary Debt Issue

EJ Insight: China’s corporate bond market: bracing for the storm
For investors in bonds issued by Sichuan Coal Industry Group Ltd., it was a gut-wrenching experience.

They had thought their money was safe following the coal company’s notice on June 7 about its plan to repay the principal and interest of its CP001 bond issue maturing in a week.

But on June 14 Sichuan Coal suddenly alerted the investors about the uncertainties of meeting its obligations, the China Securities Journal reports.

...For every 100 yuan (US$15.19) worth of assets, almost 90 yuan is funded by borrowings, the Journal notes.
Sichuan Coal's default has imperiled a subsidiary, Sichuan Hua Ying Shan Guangneng. A project in Guang'an is underway, but requires 2 billion in debt. The subsidiary is hoping for government support, and Sichuan Coal was pushing the project with the party secretary and mayor of Guang'an only a week before defaulting. The bonds were approved by the Shenzhen Stock Exchange, but the default of the parent has thrown the bond issue into limbo.

EO: 川煤集团短融违约 子公司20亿债券发行前途未卜

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