China Bond Defaults Tick Up After Lull as Dye Maker Delinquent

  • Yabang Investment failed to make full payment on local bonds
  • The nonpayment follows default in past week by Dongbei Special

Defaults in China’s local corporate bond market ticked up this week as dye-and-paint maker Yabang Investment Holding Group Co. missed payment on notes due Thursday.

The firm, based in the eastern province of Jiangsu, owed 211.6 million yuan ($31.7 million) on the 5.78 percent debentures it had issued last September, according to the statement, which didn’t give further details. It brings the total number of onshore note failures this quarter to at least three, after Dongbei Special Steel Group Co. missed payment on securities due Sept. 24.

The uptick in defaults comes after a lull amid speculation authorities had been helping to stave off failures, following 10 nonpayments in the second quarter and 7 in the first three months of the year. Chinese firms must repay about 1.53 trillion yuan of onshore notes in the fourth quarter, the most on record, compared with 1.48 trillion yuan in the previous three months, according to data compiled by Bloomberg.

Yabang Investment defaulted on separate securities in February, before making the full payment in March. The firm missed the payment due to a cash shortage, and plans to actively raise funds through financing and disposal of non-core business assets, according to the statement Thursday.

— With assistance by Stephen Tan

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