Steel­maker be­comes lat­est Chi­nese com­pany to miss bond pay­ment

The Pak Banker - - 6BUSINESS -

BEI­JING: A state-owned Chi­nese steel­maker failed to make a 852 mil­lion yuan ($131 mil­lion) bond pay­ment and ex­pressed un­cer­tainty about meet­ing a larger bill next week as the slow­ing econ­omy weighs on debt-laden pro­duc­ers.

Dong­bei Spe­cial Steel Group Co., based in the north­east­ern city of Dalian, said it failed to re­pay the sum of in­ter­est and prin­ci­pal due Mon­day, ac­cord­ing to a state­ment posted on the Chi­na­money web­site. The com­pany said in a sep­a­rate state­ment that it also might not be able to re­pay 1 bil­lion yuan due April 3 on a 90-day bill be­cause of tight liq­uid­ity. The com­pany sold 800 mil­lion yuan in one-year bonds last year with a coupon of 6.5 per­cent, ac­cord­ing to data com­piled by Bloomberg.

Chi­nese firms are strug­gling with surg­ing debt bur­dens as Premier Li Ke­qiang seeks to weed out zom­bie cor­po­ra­tions amid the coun­try's worst eco­nomic slow­down in a quar­ter cen­tury. At least a dozen com­pa­nies have de­faulted on bonds over the past two years even as the cen­tral bank loos­ened mone­tary pol­icy. Nan­jing Yu­run Foods Co., a sausage maker, and Zibo Hongda Min­ing Co., an iron ore miner, both said they de­faulted on notes this month. Dong­bei Spe­cial Steel's missed pay­ment comes just four days af­ter the com­pany dis­closed that its for­mer chair­man, Yang Hua, was found dead by hang­ing at his home. The com­pany said the death was un­der in­ves­ti­ga­tion by the rel­e­vant au­thor­ity.

Other Chi­nese steel­mak­ers are also fac­ing ris­ing debt pres­sures. The north­ern city of Tian­jin plans to set up a com­mit­tee of cred­i­tors to help Bo­hai Steel Group Co. "get out of trou­ble," Caixin re­ported March 18. Min­is­ter of Hu­man Re­sources Yin Weimin said Feb. 29 that about 1.8 mil­lion steel-and-coal work­ers would be laid off as the coun­try cuts in­dus­trial over­ca­pac­ity and re­forms bloated state-owned en­ter­prises.

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