Another State-Backed Coal Firm Misses Bond Payments as Regulator Pledges ‘Zero Tolerance’
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State-owned coal company Jizhong Energy Group Co. Ltd. missed part of its payments on two bonds that came due Friday, several of its bondholders told Caixin.
Jizhong Energy, backed by the Hebei provincial government, transferred the principal of 500 million yuan ($77 million) of one bond but failed to pay the interest, meaning Shanghai Clearing House was unable to distribute the money to bondholders. For a different bond, the coal miner missed the payment entirely, Caixin understands.
One bondholder source said the Hebei government had helped Jizhong Energy obtain funds from a state-owned enterprise (SOE) credit protection fund, but because of the short notice the money arrived too late. “They are supposed to pay on Monday,” the source said.
China Regulator Shakes Up Credit Ratings Rules in Wake of Confidence Blows to Investors
Chinese companies will no longer be asked by the regulator to attest to how risky the companies and some of their interbank bonds are when registering the bonds with the regulator.
China’s interbank bond market regulator is pushing for a more market-oriented approach to debt ratings following a series of high-profile defaults by highly rated state-owned companies (SOEs) that exposed how domestic credits ratings agencies soft-peddled the potential risks to investors.
Under the changes, Chinese companies will no longer be asked by the regulator to attest to how risky the companies and some of their interbank bonds are when registering the bonds with the regulator.
Regulator Criticizes Three Bond Underwriters in Yongcheng Coal Scandal
A self-regulatory body under China’s central bank announced that three major underwriters of Yongcheng Coal’s bonds had violated self-regulatory rules of the interbank bond market.
China’s interbank bond market regulator has criticized three more financial institutions involved in shady bond issuances by state-owned
Yongcheng Coal, the latest of 11 companies to be named and shamed after the coal miner’s surprise default shattered confidence in debt offerings by state-owned enterprises (SOEs).
On Friday, the National Association of Financial Market Institutional Investors (NAFMII), a self-regulatory body under China’s central bank, announced that three major underwriters of Yongcheng Coal’s bonds
Yongcheng Coal Banned From Debt Sales for a Year
Current and former chairmen of Yongcheng Coal and Electricity Holding Group Co. Ltd. are deemed inappropriate candidates for positions in the debt financing instrument market for a year.
Yongcheng Coal and Electricity Holding Group Co. Ltd. was banned from debt sales for a year by China’s interbank bond market regulator after the state-owned coal mine operator’s bond
default two months ago set off a chain reaction in the bond market.
A “self-disciplinary” investigation into Yongcheng Coal found a number of violations, including inaccurate and incomplete information on the company’s independence disclosed in its bond issuance prospectus. The probe also turned up failure to accurately disclose assets used by the company’s controlling shareholder and related-party transactions with the controlling shareholder, the National Association of Financial Market Institutional Investors (NAFMII) said Thursday in a statement.
Ex-Finance Minister’s Call for Bond Market Reform Sparks Central Bank Pushback
Although reform of China’s stock markets has accelerated since the meltdown in the summer of 2015, reform of the bond market has lagged, a former Chinese finance minister said in a recent criticism of the market reform efforts. Photo: IC Photo
A row over how to overhaul China’s bond market has spilled over into the public domain after former Finance Minister Lou Jiwei launched a broad-brush attack on the country’s regulators and warned that if reforms aren’t speeded up, the market could well be the source of another buildup of financial risk.