Chinese Coal Company Misses Bond Payment as Debt Woes Spread

  • Sichuan Coal Industry misses 1.057 billion yuan bond payment
  • The firm is still trying to raise funds through many channels

A Chinese coal firm missed a bond payment, becoming at least the 11th company to default on onshore debt obligations this year.

Sichuan Coal Industry Group, based in the southwestern province of Sichuan, failed to repay 1.057 billion yuan ($160.1 million) of bond principal and interest due Wednesday, it said in a statement to Chinamoney. The state-owned company sold the 1 billion yuan of one-year notes with a 5.72 percent coupon in 2015.

Chinese coal firms have struggled as the nation’s worst economic slowdown in a quarter century batters demand and Premier Li Keqiang vows to cut excess capacity in industries. The companies need to repay 233 billion yuan of bonds coming due by the end of this year, Bloomberg-compiled data show. Chinacoal Group Shanxi Huayu Energy Co. failed to make a note payment in April.

“This wave of defaults may continue to spread for those coal companies that have a lot of debt due this year,” said Helen Lau, an analyst at Argonaut Securities (Asia) Ltd. in Hong Kong.

Sichuan Coal is facing a cash shortage and is still trying to raise funds through many channels, according to the statement.

China’s coal production fell 11 percent to 268 million tons in April. That’s the biggest slump in data going back to April 2015.

The company is wholly owned by the State-Owned Assets Supervision and Administration Commission of Sichuan Province, rating firm Shanghai Brilliance Credit Rating & Investors Service Co. said in a statement on Chinamoney website on May 30.

— With assistance by Judy Chen, and Guo Aibing

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