Huatong Road & Bridge Group Co. fuels Chinese Debt Costs
Published By : 21 Jul 2014 | Published By : QYRESEARCH
Chinese companies’ borrowing costs have reached the highest in eight months with concerns for the Huatong Road & Bridge Group Co., which might emerge as the second onshore corporate to default on the bonds.
The top rated commercial paper yields during a year climbed by 26 points previous week. This was the steepest since the increase in mid November last year to 4.9 percent, which was the highest in April month.
According to a senior analyst the market has become careful as investors are worried over companies such as Huatong or Chaori. The analyst also stated that signs of recovery are not strong and many companies are facing burdens from huge past debts, also the possibility of more companies may default their bonds should not be ignored.
China is going through a second onshore non-payment of bonds after the organization Huatong Road and Bridge Group Co. stated previous week that they might not be able to recover the USD 64.5 million related to the year old debentures that have the mature date on July 23. Also, the company Shanghai Chaori Solar Energy Science and Technology Co. has missed a part coupon payment during March, which lead to increased concerns that there was mourning debt among many of China’s corporate which might lead to other missed deadlines as well fall of many companies.
Also, a default can affect confidence of investor in short-term notes. These notes are deemed safer than regular longer dated bonds, which can cause money managers to doubt the guarantees from debt underwriters.