China Rocked By Two Biggest Corporate Defaults Yet

Monday, February 11, 2019
By Paul Martin

by Tyler Durden
Mon, 02/11/2019

Ever since Beijing allowed Chinese companies (even certain state-owned enterprises) to officially fail for the first time in 2016, and file for bankruptcy to restructure their unsustainable debt loads, it’s been a one-way street of corporate bankruptcies, one which we profiled last June in “Is It Time To Start Worrying About China’s Debt Default Avalanche”, and which culminated with a record number of Chinese onshore bond defaults in 2018, as a liquidity crunch sparked a record 119.6 billion yuan in defaults on local Chinese debt in 2018.

And by the early look of things, 2019 won’t be any better after two large Chinese borrowers missed payment deadlines this month according to Bloomberg, setting the scene for even more corporate defaults, and “underscoring the risks piling up in a credit market that’s witnessing the most company failures on record.”

The first one was China Minsheng Investment Group, a private investment group with interests in renewable energy and real estate, which failed to make a Feb. 1 bond payment to creditors. The Shanghai-based financial conglomerate didn’t repay investors in a 3 billion yuan bond that matured Jan. 29, then pledged to give them their money back three days late, Bloomberg News reported previously. But that didn’t happen.

The firm, one of the largest private investment champions in China, was backed by 59 non-state companies and obtained an operating license in 2014, it said in a November bond prospectus. China Minsheng Investment had 232 billion yuan in total debt and 310 billion yuan of assets as of June 30, according to Shanghai Brilliance Credit Rating & Investor Service Co.

The Rest…HERE

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