LONDON, July 2, 2018 /PRNewswire/ --
As another aluminium products manufacturer defaults on its corporate bond interest payments, the trend for the aluminium industry in China continues. Companies have defaulted on at least 20.7 billion yuan ($3.19 billion) in yuan bonds and $350 million in dollar debt in the six months through June, marking a 40% increase compared to the same period last year. In this Insight we explore the reasons for this trend and discuss why defaults could be seen as progress for China.
Aluminium rolling mill has defaulted on interest payments
On 14 June, Zhongrong Shuangchuang Beijing Technology Group (formerly Zouping Great Wall Group) defaulted on interest payments for its RMB 600 million corporate bond, which was issued on June 2016. Amongst other business ventures, the company produces aluminium rolled products. Pre-Sensitized (PS) plate and foil are the main aluminium rolled products they produce. The company issued RMB 600 million and RMB 800 million corporate bonds in September 2016 and August 2017, respectively.
This is just one example, from the aluminium industry, of a growing trend in China. Companies have defaulted on at least 20.7 billion yuan ($3.19 billion) in yuan bonds and $350 million in dollar debt in the six months through June, marking a 40% increase compared to the same period last year. The data was compiled by Nikkei from Shanghai DZH and other sources.
Rise in prices helped aluminium companies in 2017
China has made headway in the past two years in stabilising its debt burden. The supply side reform in steel, coal and aluminium industries have driven the rise in commodity prices, which has buoyed profits at struggling steel, coal and aluminium companies, specifically State-Owned Enterprises (SOEs).
Read the full story: https://www.crugroup.com/knowledge-and-insights/insights/2018/corporate-bond-default-indicates-potential-financial-risk-in-chinese-aluminium-industry/
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