SHANGHAI (Reuters) - Chinese banks and fund managers dumped their holdings of riskier bonds last week after a series of credit shocks involving state-owned enterprises (SOEs) jolted China’s corporate bond market.
Below is a list of SOEs whose debt problems in recent weeks have raised concerns among investors.
Defaults have been mainly concentrated in traditional industries, including coal and automobiles.
YONGCHENG COAL & ELECTRICITY HOLDING GROUP
Yongcheng Coal & Electricity Holding Group Co Ltd said on Nov. 10 it failed to make principal and interest payments on 1 billion yuan ($152 million) in maturing commercial paper, just weeks after raising a similar amount through a debt issue.
The company also said it was uncertain of making payments on two bonds worth 2 billion yuan that mature this weekend due to tight liquidity.
Yongcheng mainly engages in the investment and management of coal, electricity, railway, chemical and mining.
The company is a unit of Henan Energy and Chemical Industry Group Co Ltd, and is ultimately controlled by the Henan provincial State-Owned Assets Supervision and Administration Commission.
HUACHEN AUTOMOTIVE GROUP
Huachen Automotive Group, a key state-owned enterprise owned by the government of Liaoning province, defaulted on a 1 billion yuan bond in October, citing financial strain.
The company is the parent of Brilliance Automotive Holdings, the Chinese joint venture partner of BMW. Huachen said on Monday that creditors had applied to a Chinese court to restructure the company.
Huachen has a total of 47,000 employees and assets of more than 190 billion yuan, it said on its website.
Tsinghua Unigroup, a major government-backed player in China’s technology race, defaulted on a 1.3 billion yuan ($197.96 million) bond, three sources told Reuters.
China Chengxin International Credit Rating (CCXI) on Nov. 16 downgraded the company’s credit rating to BBB from AA, and said the default could potentially strangle Tsinghua’s funding and squeeze its liquidity.
Tsinghua, founded by its namesake university in Beijing, is a digital infrastructure and services company with a focus on electronic components and equipment manufacturing. The company had nearly 40,000 employees at the end of 2018.
Tsinghua Unigroup has several core subsidiaries, including Unisplendour Corporation Limited and Unigroup Guoxin Microelectronics Co.
As the defaults partially froze Chinese credit markets, SOEs announced cancellations of their planned bond issues. Some of them include:
Reporting by Luoyan Liu and Andrew Galbraith; Editing by Vidya Ranganathan and Ramakrishnan M.
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