China’s credit markets faced their latest day of reckoning as bonds of Winsway Enterprises Holdings Ltd. held near a record low before a deadline to avert default.
The importer of coal for steelmakers must pay a $13.15 million coupon on its 8.5 percent bonds as a 30-day grace-period ends Friday. Winsway missed the payment last month and said it planned to discuss debt restructuring. The securities were at
28.2 cents on the dollar as of 3:38 p.m. in Hong Kong, near their record low of 28 cents marked Thursday, according to prices compiled by Bloomberg.
Global investors are scrutinizing Chinese borrowers as the slowest economic growth since 1990 and increased government tolerance for failures leads to more defaults. Homebuilder Kaisa Group Holdings Ltd. became China’s first developer to miss U.S. currency obligations last month, while underground mall developer Renhe Commercial Holdings Co. bought back its dollar notes at a discount in a so-called distressed exchange.
Laura Shi, a spokeswoman in Beijing for Winsway, said the company will disclose information about any coupon payment after Hong Kong stock exchange trading hours.
Akin Gump Strauss Hauer & Feld LLP has been appointed to act as the legal advisor to an expected bondholder group, according to a filing from Winsway dated April 8. There were no immediate replies to e-mails and phone messages seeking comment from Mark Fucci, Hong Kong-based partner at the law firm.
The financial stress at Winsway comes as coking-coal prices have dropped 2.6 percent this year, after tumbling 55 percent in the four years through 2014. Indonesian miners PT Bumi Resources and PT Berau Coal Energy are also restructuring $2.325 billion of their outstanding bonds following the price slump. SouthGobi Resources Ltd., a Mongolian coal miner, has also sought more funding to stay afloat.
Winsway sold $500 million of the bonds in question in 2011. It bought back some of them from the market and via a tender offer in 2013. Its cash had dwindled by 78 percent to HK$438.6 million ($56.6 million) as of Dec. 31 from a year earlier, Bloomberg data show.