China Internet Firm Flags Debt Stress Year After Default

An Internet company in Beijing may struggle to pay bond investors next month, the latest sign of stress in China’s debt markets a year after the nation’s first onshore default.

There are “big uncertainties” about whether Cloud Live Technology Group Co. can repay interest and principal on a note investors can opt to sell back on April 5, according to a statement Tuesday from GF Securities Co., the securities’ lead underwriter. Cloud Live said March 4 investors had applied to sell back 398.71 million yuan ($64 million). The company had only 10.39 million yuan in a special account for the repayment as of Tuesday, GF Securities said.

Chinese companies are struggling with a slowdown in the economy and a record amount of debt redemptions this year. Premier Li Keqiang said on March 15 the government will tolerate individual cases of financial risk, one year after Shanghai Chaori Solar Energy Science & Technology Co. became the nation’s first and sole company to default in the onshore bond market.

A call to the company’s securities department today seeking comment went unanswered.

Cloud Live reiterated earlier this month it saw “big uncertainties” over the possible note repayments, after saying the same thing in February. GF Securities said in its statement Tuesday that Cloud Live is “actively promoting” asset sales and account receivable retrievals to help ease its capital shortage.

The yield on Cloud Live’s 6.78 percent 2017 bonds has jumped to 19.15 percent from 9.7 percent on Dec. 31, exchange data show.

— With assistance by Judy Chen

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