September 26, 2018 / 2:17 AM / 8 months ago

China's Neoglory Holdings defaults on exchange-traded bond payments

SHANGHAI, Sept 26 (Reuters) - Chinese apparel and accessories retailer Neoglory Holdings Group has defaulted on payments on an exchange-traded bond, the company said.

In a statement posted to the website of the Shanghai Stock Exchange on Tuesday, the company said it was unable to pay back principal to bondholders exercising put options on bonds worth 1.74 billion yuan ($253.20 million), out of an initial issuance of 2 billion yuan.

“Due to the impact of factors including macro leverage, a tightening of bank credit and private enterprise financing difficulty, the company’s liquidity has exhibited problems and led to an inability to make required interest and principal payments on this bond in time,” the company said.

The company was also unable to make interest payments totalling 130 million yuan due Sept. 25, the statement said.

Neoglory also defaulted on a commercial paper issue due Sept. 25. The Shanghai Clearing House said on Tuesday it had received only interest and partial principal payments on the maturing instrument.

Chinese companies have defaulted on 41 bonds worth a combined 45.6 billion yuan as of early September. While Chinese regulators have said the default rate remains much lower than in many other countries, the rise in bond defaults has highlighted risks to China’s economy as growth slows and amid an intensifying trade war with the United States. ($1 = 6.8720 Chinese yuan) (Reporting by Andrew Galbraith; Editing by Sam Holmes)

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