Latest China Bond Default Puts Spotlight on Financial Reporting
- Kangde Xin had more cash than all its debt at end of September
- Problems aren’t often easliy captured by disclosure: Manulife
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The Chinese company that defaulted on a bond on Tuesday reported cash levels just four months ago that were enough to pay the debt 15 times over.
Kangde Xin Composite Material Group Co., based in the eastern province of Jiangsu, failed to pay a 1 billion yuan ($148 million) local note due Jan. 15 due to a liquidity crunch, according to the company. Yet as of end-September, it had 15.4 billion yuan in cash and equivalents, more than double the amount of its short-term debt, according to regulatory filings.