China's Baoding Tianwei Defaults for Third Time on Bond Payment

  • Baoding Tianwei misses 1.59 billion yuan of debt payments
  • The company will proceed with restructuring, statement says

China’s Baoding Tianwei Group Co., which last year became the first state-owned company to renege on onshore debentures, defaulted for a third time on a bond payment.

The state-owned maker of electric transformers said it failed to pay 1.59 billion yuan ($245.5 million) of principal and interest on five-year notes due Thursday, according to a statement on Chinamoney’s website. It cited cash depletion and said it will proceed with restructuring. The firm missed an interest payment in April last year for the same bonds, which it sold in 2011 with a 5.7 percent coupon and 1.5 billion yuan face value.

Chinese companies are struggling with surging debt burdens as Premier Li Keqiang seeks to weed out zombie corporations amid the country’s worst economic slowdown in a quarter-century. At least seven firms have missed local note payments this year, already reaching the tally for the whole of 2015.

Baoding Tianwei also reneged on separate bond obligations in February.

— With assistance by Judy Chen

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