Wuhan Guoyu Logistics Industry Co Ltd, an unlisted privately held logistics firm based in the Chinese city of Wuhan, said it may be unable to make payment on 400 million yuan ($60.26 million) of one-year commercial paper maturing Aug. 6. The firm posted a statement on the website of China’s interbank bond market operator on Monday.
In the statement, the firm blamed cashflow problems on difficulties at its Yangzhou-based shipbuilding subsidiary.
China’s shipbuilding industry, like that of many competitor nations, has been struggling with overcapacity and weak global trade for several years.
Chinese bond defaults, which until 2015 were very rare, have become more and more common in 2016 as Beijing has intensified its campaign to shut down “zombie” companies and erode previously widespread perceptions of state guarantees for nearly all bond debt.
Over 20 Chinese firms have defaulted in 2016 so far and analysts say more are likely in the remainder of the year given the large amount of debt maturing in the second half. ($1 = 6.6379 Chinese yuan renminbi)
[Source:- THE INDIAN EXPRESS]
