Tuesday, 22 July, 2014

 
Published July 17, 2014
CEO probe puts China firm at risk of landmark bond default
Nxy china business 1707

A little-known construction firm is at risk of becoming the first borrower to default in China's largest bond market, highlighting how Beijing's anti-corruption drive could aggravate financial pressure on the struggling real estate sector - PHOTO: REUTERS

[SHANGHAI] A little-known construction firm is at risk of becoming the first borrower to default in China's largest bond market, highlighting how Beijing's anti-corruption drive could aggravate financial pressure on the struggling real estate sector.

Huatong Road & Bridge Group Co Ltd said on Wednesday it was uncertain whether it would be able to pay interest or principal on an 400 million yuan (US$64.48 million) one-year bond set to mature on July 23, which it blamed on an ongoing official investigation into its chief executive.

That would be the first time China's interbank bond market - the primary platform for China's institutional fixed income investors, hosting 94 per cent of the country's bond issues - has seen a public default, and the first time a Chinese company has openly defaulted on both interest and principal for a bond.

Huatong's chief executive Wang Guorui was publicly dismissed from Shanxi province's Chinese People's Political Consultative Conference (CPPCC), a political advisory body, on July 10 on suspicion he had broken the law, according to a statement on the provincial government's website.

 
 
 
 
 
 
 

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