China Minsheng defaults on principal repayment of RMB 3 bln private placement note

minutes 2019/01/31 06:23:51
China's News, China's Financial News, China Minsheng Investment Group

Jan 31, 2019 (China Knowledge) - Cash strapped China Minsheng Investment Group (CMIG) has failed to make a partial repayment of an RMB 3 billion private placement note, raising concerns that there may be more defaults to come.

Investors of the note which has a coupon of 5.2% were set to receive their money back earlier on Tuesday this week but have yet to receive payment from the company, marking the first time the company has failed to make a loan repayment on time.

CMIG which is an investment group owned by 59 private Chinese companies has said that it is working on repayment procedures and declined to make any further comments on the issue.

The group which depends heavily on short-term loans from banks and bond issuances to conduct its investment business is now facing a liquidity crisis as Chinese regulators are putting increasing pressure on companies to reduce their debt and leverage.

As a result, the company is facing difficulties in rolling over its old debts and secure new financing sources. Last week, a bond issued by the company which will mature in December 2020, plummeted by nearly 30% in a single day over concerns of the company’s increasing likelihood to default on its repayments.

The company currently has more than 10 outstanding bond issuances with more than RMB 14 billion worth of debt set to mature this year in the bond market.

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