China Sees Second Shipbuilder Default This Year as Economy Slows

Photo: Wuhan Guoyu Logistics Industry Group

By Bloomberg News

(Bloomberg) — A Chinese shipbuilder failed to make a bond payment due Monday, becoming the second such company to default in the onshore market this year.

Wuhan Guoyu Logistics Industry Group Co., which is based in the central province of Hubei, didn’t transfer funds for interest and principal payment to the Shanghai Clearing House before the due time, according to a statement Monday. The firm issued the 400 million yuan ($60 million) of one-year bonds at 7 percent in 2015.

Chinese companies are struggling with record debt payments in the second half as Premier Li Keqiang seeks to cut overcapacity with the economy growing at the slowest pace in a quarter century. At least 18 local yuan bonds have now defaulted this year, exceeding the seven for all of 2015.

The shipbuilder said on Aug. 1 it may not be able to repay the notes because of a capital shortage. The company also has 200 million yuan of securities due on Oct. 28, according to Bloomberg data.

Another shipbuilder Evergreen Holding Group Co. defaulted in May.

© 2016 Bloomberg L.P

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