Chinese steelmaker defaults on HK$1 billion debt just days after ‘chairman commits suicide’
Dongbei Special Steel says it could miss an even bigger payment in early April
A steel group in northern China failed on Monday to repay 852 million yuan (HK$1 billion) in corporate debt, just days after its chairman was found dead in an apparent suicide.
A bigger default is expected from Dongbei Special Steel Group, as corporate leverage ratios rise sharply and Chinese industry battles persistent slowing growth.
Dongbei Special Steel, a steelmaker owned by the Liaoning provincial government, failed to repay creditors 852 million yuan in one-year notes and interest on Monday in a rare default by a local government-owned company in the interbank bond market.
The Dalian-based steelmaker also said on the website of the Shanghai Clearing House that it was very likely to miss the payment of another tranche of debt worth 1.015 billion yuan, in the form of 90-day “super short-term commercial paper” and interest, due on April 5.
While defaults by private businesses and state enterprises under the central government are not new, local governments have so far sought to avoid such defaults out of fear of a ripple effect.
The failure was the eighth credit default in China’s debt market this year, reflecting growing dangers in China’s corporate debt sector amid excess capacity and a broad economic slowdown.
In March alone, sausage maker Nanjing Yurun Foods, and iron ore company Zibo Hongda Mining defaulted on their notes.