Posted on 03/12/2014 3:24:07 AM PDT by Red in Blue PA
On Friday, Shanghai Chaori Solar Energy Science & Technology Co. failed to make an 89.8 million yuan ($14.7 million) interest payment, the first domestic corporate bond default in the history of the People’s Republic of China.
The company, in the red for three straight years, narrowly avoided missing an interest payment on its five-year, billion yuan obligation in January 2013. Then, the Shanghai municipality leaned on banks to not press claims on overdue loans so that Chaori could pay bondholders.
This time, Shanghai officials sat on their hands after the company issued a warning on Tuesday that it was able to pay only a small portion—less than five percent—of the interest coming due. Even more remarkably, authorities let Chaori default during the annual meeting of the National People’s Congress, a particularly sensitive moment in the Chinese political calendar.
Analysts correctly praised Beijing for not rescuing the solar panel company. After all, the missed payment for the first time introduced the concept of risk in the $1.4 trillion corporate bond market, where investors were blindly chasing offerings with the highest coupons regardless of the creditworthiness of issuers.
(Excerpt) Read more at forbes.com ...
I’m sure a lot of our tax dollars found their way into that company.
Thanks, Obama.
Chinese Solyndra?
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