Shandong Helon Yield Rises to Record After Estimate of 2011 Loss

The yield on Shandong Helon Co. (000677)’s bond rose by more than 2,000 basis points in January to a record after the Chinese maker of chemical fiber said it may report a net loss for last year.

The company’s 400 million yuan of one-year debt closed yesterday with a yield of 30.2 percent, according to data from Chinabond, the nation’s bond clearinghouse. One-year commercial paper and medium-term notes with an A- rating, the lowest-rated index available, yields 9.78 percent according to Chinabond. (CNMPG1) China Lianhe Credit Rating Co. lowered its rating on Shandong Helon’s bond to a non-investment grade BB+ in December. A basis point is 0.01 percentage point.

Shandong Helon, whose debt matures in April, said this week it expects to post a net loss of 1 billion yuan ($159 million) for last year after having said earlier last month that it had 397 million yuan overdue with banks, accounting for 119 percent of the company’s net assets as of its latest audit. No company in China has defaulted on publicly traded domestic debt since the country’s central bank started regulating the market in 1997, according to Moody’s Investors Service.

Shares of Shandong Helon have been suspended the company said in an Aug. 22 statement it had discovered a matter that may have a “relatively large” impact on its stock price and which hadn’t been disclosed. Its shares will be suspended until a statement is issued on the matter, the company said then.

The company, based in the city of Weifang in eastern China’s Shandong province, cited macroeconomic conditions for its estimated 2011 loss. Shandong Helon posted a loss of 408 million yuan for 2010, according to a filing to Shenzhen’s stock exchange.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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