China’s Opaque ‘Keepwell’ Bonds Face New Test as Ruling Nears
- Hong Kong court to decide on Founder Group keepwell bond case
- Founder’s administrator rejected claims on such debt in 2020
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China’s $740 billion offshore bond market awaits a fresh test of how creditors are protected by an ambiguous form of payment support, as a key court decision looms for one of the country’s biggest defaulters.
A five-day trial concluded Tuesday in Hong Kong involving lawsuits effectively filed by holders of Peking University Founder Group Corp. dollar bonds with so-called keepwell deeds, a vague pledge of funding support from issuers’ parent companies. A ruling on whether the delinquent borrower should honor those obligations is expected after a final hearing on Feb. 3, according to Judge Jonathan Harris.