China close to first bond default by state-owned firm

Shanghai

A CHINESE power-transformer maker could become the first state-owned company to default in the onshore note market after flagging "big uncertainty" about its ability to make a bond interest payment due on Tuesday.

Baoding Tianwei Group Co, a unit of central government-owned China South Industries Group Corp, said in a statement dated Monday that it had not raised enough money to pay the interest. The company was due to repay 85.5 million yuan (S$18.6 million) of interest on Tuesday on the 1.5 billion yuan of 5.7 per cent bonds issued in April 2011, according to an April 14 statement.