Chinese Banks Demand Tianwei Repay Bonds Early After Default

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Industrial Bank Co. and Huaxia Bank Co. asked Baoding Tianwei Group Co., a Chinese maker of power transformers, to repay two bonds early after it became the first state-owned enterprise to default on onshore debt in April.

Industrial Bank is seeking 793 million yuan ($125 million) in principal and interest while Huaxia Bank has asked for 248 million yuan, according to Baoding Tianwei’s statement on the Chinamoney website Monday. The lenders sent requests for the notes due in December and March to the China International Economic & Trade Arbitration Commission.

The demands come as investor concern about defaults escalates amid a slowdown in the world’s second-biggest economy. Three firms have missed obligations on onshore notes in 2015 after Shanghai Chaori Solar Energy Science & Technology Co. last year became China’s first to miss payments.

The fight for survival in China’s solar and wind industries, where overcapacity has weighed on earnings, is escalating after President Xi Jinping said last year the nation should boost alternative-energy supply amid worsening smog.

Suntech Power Holdings Co. and LDK Solar Co., once the biggest solar manufacturers, both filed for bankruptcy after failing to repay debts.

Solar Debt

Yingli Green Energy Holding Co., which was until last year the world’s biggest panel company by shipments, is meanwhile trying to raise money to repay a local venture’s bond that’s due next month, Jean Tian, an investor relations officer, said Monday. Yingli lost two-thirds of its market value in 2015 and in May acknowledged “substantial doubt” about whether it can stay afloat amid a pile of debt.

Yingli plans to raise money by selling land and using other cash flows to help cover Baoding Tianwei Yingli New Energy Resources Co.’s 1 billion yuan bond coming due on Oct. 13, Tian said.

Baoding Tianwei Group, also based in the city of Baoding in Hebei in China’s north, has a 23 percent stake in Shanghai-listed Baoding Tianwei Baobian Electric Co., according to an Aug. 17 statement from the latter. Baoding Tianwei Baobian has 26 percent stake in Baoding Tianwei Yingli New Energy Resources, an April Baoding Tianwei Yingli statement shows.

Baoding Tianwei Group sold 1 billion yuan of three-year bonds at 6.1 percent in December 2012 and 1 billion yuan of three-year notes at 5.8 percent on in March 2013. Industrial Bank holds both of the securities and Huaxia Bank owns the second, according to the statement. They were issued in private placements.

In addition to transformers for companies such as the State Grid Corp., China Southern Power Grid Co. and China Datang Corp., it produces solar materials such as polysilicon, the raw material for solar cells, and panels.

Chang’An International Trust Co. and Tongxin Securities Co. also filed similar requests for the two bonds, according to Baoding Tianwei’s statement Monday.

— With assistance by Judy Chen

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