Sinovel Wind Bonds Suspended From Trade After Yearly Loss Widens

Sinovel Wind Group Co. (601558)’s bonds were suspended from trading today after the wind-turbine maker said losses widened almost sixfold.

The company reported a loss of 3.45 billion yuan ($551 million) in 2013 versus 582.7 million yuan the previous year, according to a statement to the Shanghai stock exchange yesterday. The bourse, in line with its rules, will decide within seven trading days whether to maintain the halt on the notes, Sinovel said in a statement today.

Investor concern about China’s corporate debt repayment risk is mounting after Shanghai Chaori Solar Energy Science & Technology Co. (002506) last month became the first company to default on onshore notes. Bonds issued by Baoding Tianwei Baobian Electric Co., a solar-cell maker, stopped trading in March after it reported a second yearly loss for 2013.

Sinovel’s President Liu Zhengqi said priority will be put on ensuring funds are available to meet interest payments on its notes, China Securities Journal reported today.

The yield on Sinovel’s 2.6 billion yuan of 6 percent 2016 bonds jumped to 11.55 percent as of yesterday, from 5.99 percent a year earlier, according to exchange data. Yields on the company’s 200 million yuan of 6.2 percent securities, also due in 2016, more than tripled to 19.27 percent in the same period, the data show.

“We can’t exclude the possibility of default for the two bonds,” said Chen Ying, a fixed-income analyst at Sealand Securities Co. in the southern economic zone of Shenzhen. “The company is under great pressure to repay debt.”

A press official for Beijing-based Sinovel wouldn’t comment on the possibility of default when reached by phone.

Investors have an option to sell the 6 percent bonds back to Sinovel Dec. 27, according to data compiled by Bloomberg. The company will repay principal and interest on such debt, the China Securities Journal cited Liu as saying.

China International Capital Corp., in a report released on March 14, flagged 12 companies with outstanding onshore bonds in “great need” of more scrutiny after changes in the credit profiles of issuers, including Sinovel and Baoding Tianwei. (600550)

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net; Sandy Hendry at shendry@bloomberg.net Beth Thomas, Chris Bourke

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