- New date on which investors can sell notes back is Nov. 20
- Comes after noteholders said to have been asked not to sell
A Chinese state-owned steel trader postponed a date at which investors can demand bond repayment and also delayed an interest payment on the securities, after authorities were said to have stepped in to help the company.
Investors can’t sell back Sinosteel Co.’s 2 billion yuan ($314.4 million) of 2017 notes until Nov. 20, after an original option date of Oct. 20, according to a company statement posted on Chinabond’s website Friday that didn’t say if investors agreed on the changes. The move comes after parent Sinosteel Corp. sent a letter to noteholders pleading with them to not sell the bonds back as Sinosteel would be unable to repay, and the National Development and Reform Commission planned to meet investors, people familiar with the matter said last week.
An interest payment due Oct. 20 is being delayed, the company said in a statement on Monday, without giving a new date for the payment.
China’s President Xi Jinping is trying to rein in the world’s biggest corporate debt loads without sparking turmoil in financial markets. Defaults have mounted as economic growth fell below 7 percent in the three months through September in the slowest quarterly expansion in more than six years. In a sign of official concern, the NDRC would also ask investors in Sinosteel not to sell back the notes, one of the people said last week.
“Sinosteel probably communicated with investors and got permission for the deadline extension,” said Zhang Li, a bond analyst at Guotai Junan Securities Co. in Beijing. “It’s still uncertain if it can meet all the payment on the due date after the deadline is extended.”
Chinese credit markets also got a reprieve last week on another borrower’s debt. Sausage maker Nanjing Yurun Foods Co., which had said earlier last week it wasn’t sure it could repay a 1.3 billion yuan note due Oct. 18 amid cash shortages, issued a statement Friday saying it would repay.
Sinosteel noteholders must register by Nov. 16 to sell the securities back, according to the statement. The firm will use stock of unit Sinosteel Engineering & Technology Co. as a pledge for the bonds.
“With the NDRC’s coordination and the prospect of high losses for the note sale, investors may choose not to sell the bonds to the company,” Shenwan Hongyuan Group Co. analysts led by Chen Kang said in a report Monday. “A default may be avoided.”
— With assistance by Judy Chen