China Dollar Bond Default Tests Bank Guarantees for First Time
- China Minsheng defaulted dollar bond carries letter of credit
- SBLC enforcement process could be onerous and protracted: How
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Investor faith in Chinese dollar bonds backed by banks is about to be tested after a default by one of the country’s best known private conglomerates.
China Minsheng Investment Group Corp. said last week cross-default clauses have been triggered on dollar bonds worth $800 million. These include $300 million of debt that carries a standby letter of credit from China Construction Bank Corp. -- effectively a pledge to repay if the borrower can’t.