China's latest bond default raises red flags for investors

Hong Kong

FOREIGNERS have been slow to warm to China's domestic bond market, the world's third-largest by value. A look at the latest corporate default may explain why.

Wuyang Construction Group Co, a builder in the eastern province of Zhejiang, defaulted on two put-able notes totalling 1.36 billion yuan (S$280 million) last month. Bondholders are now up in arms, claiming in an Aug 23 filing posted on the Shanghai Stock Exchange's website that the company didn't disclose a raft of transgressions in sale documents for the bonds, which were sold in 2015. Three phone calls to Wuyang Constructions' headquarters in Hangzhou went unanswered, and the company didn't respond to a fax from Bloomberg News.