One more possible bankruptcy is looming in China as the largest private steel maker in Shanxi has failed to repay debt totaling 3 billion yuan (HK$3.75 billion) on time.
"Highsee Group's 3 billion yuan debt was overdue last week," the 21st Century Business Herald reported yesterday. "The company is running in red, and has failed to pay workers for months. Many of its furnaces have stopped operating."
This comes after domestic steel prices fell to their lowest level in more than eight years in mid-March as a result of weak demand and a surge in output.
Earlier, Shanxi coal miner Liansheng Resources Group went bankrupt while its loans, which were packaged into a wealth management product distributed by China Construction Bank (0939), are likely to be bailed out. UBS Securities securities analyst Chen Li said it is the peak season for corporate debt dues. Up to 80 percent of the nation's trusts have obligations to meet within the second quarter, he added.
Li expects more defaults, including government debt defaults, coming in the next few months, which will hurt market confidence.
Earlier this week, developer Zhejiang Xingrun Real Estate in Ningbo was said to on the verge of collapse with 3.5 billion yuan debt. LING WANG