Chaori Solar defaults on $14.6 million onshore interest payment

Chinese PV module producer Shanghai Chaori Solar Energy Science & Technology Co. failed to make an 89.8 million CNY ($14.6 million) bond interest payment on Mar. 7, leading to first default in China’s public bond market. The default reveals that the Chinese government has moved away from its practice of bailing out companies with bad debt, reports Bloomberg. Some analysts believe the default will lead to a substantial decline in risk appetite in China.
On Mar. 4, Chaori has warned bondholders that it planned to pay just 4 million CNY to holders of its March 2017 bonds on Mar. 7, 2014. The company is now attempting to sell some of its overseas power plants to raise money to repay the debt. In a stock exchange filing, Chaori Solar said it »will try to figure out when money will arrive as soon as possible« and that it would »try to keep the losses of bondholders to a minimum.« This will involve cutting or delaying directors’ salary payments and suspending capital expenditure projects, the company said.
The Shenzhen Stock Exchange suspended Chaori Solar stock from trading on Feb. 19 after the company reported a net loss for 2013, its third straight annual loss. Trading of the company’s March 2017 bonds were halted on July 8, 2013.

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