April 21, 2015 / 9:37 AM / 4 years ago

China posts first public bond default by unit of state-owned firm

SHANGHAI, April 21 (Reuters) - The deadline for Baoding Tianwei Baobian Electric Co Ltd to make an interest payment on a bond due on Tuesday passed without payment, a China bond clearinghouse official said, marking the first default by a state-owned firm.

The company said in a statement on the China bond clearinghouse website that it was unable to make the payment on time.

Calls to the company were not answered, but investors appeared to have taken the lack of a rescue in stride, with bond markets shrugging off the news.

On April 16, the company had warned investors that it might miss an 85.5 million yuan ($13.8 million) interest payment.

The 5-year, 1.5 billion yuan bond maturing in 2016 has a coupon of 5.7 percent. It was originally rated AA+, but was later downgraded to BB.

Baoding Tianwei Baobian Electric is a subsidiary of the Baoding Tianwei Group, which owns 23 percent of the listed entity. Baoding Tianwei Group is in turn entirely owned by the Beijing-based China South Industries Group Corporation, which advertises itself as a part owner of Changan Automobile Group on its corporate website as well as a major defense equipment maker. It is directly owned by the central government. (Reporting by Pete Sweeney and Shanghai Newsroom; Editing by Jacqueline Wong)

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