Baoding Tianwei secures last-minute bail-out loan from China Construction Bank

An indebted state-owned firm whose missed bond coupon payment triggered speculation Beijing would let market forces dictate its future has secured a last-minute bail-out loan, mainland media reported.

China Construction Bank (CCB) would lend an undisclosed sum to troubled Baoding Tianwei Group, helping the Hebei-based firm settle an 85.5 million yuan (HK$108.3 million) bond interest payment, Caixin News reported over the weekend.

Baoding did not respond to requests for comment from the South China Morning Post. CCB declined to comment on the report.

"It's another missed opportunity in terms of debt resolution, in terms of how a company would restructure debt, and how creditors would recover in a proper default situation, what the recovery is for the bond holders," Standard & Poor's credit analyst Cindy Huang said.

Industry experts were keenly watching the potential default, the first by a state-owned firm since the People's Bank of China began regulating the corporate bond market in 1997, to see how creditor claims were handled.

CCB both underwrote and invested in Baoding's bond issue, and took the lead to coordinate creditor actions after Baoding said last Tuesday it was unable to honour its debts, blaming heavy losses.