July 16, 2014 / 10:41 AM / 3 years ago

China construction firm warns it may fail to pay bond interest and principal

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SHANGHAI, July 16 (Reuters) - Huatong Road & Bridge Group Co Ltd, a construction firm in China, said on Wednesday it might fail to pay investors both interest and principal due on a one-year short-term bill issue that matures on July 23.

In a statement on the website of the official Shanghai Clearing House, the company warned that payments of both interest and principal on the issue are uncertain because its chairman is currently "assisting an official investigation".

If a default occurs, it would be the first public bond default in China's interbank market, the country's largest bond market, and would also be the first time a Chinese company is publicly known to have defaulted on both interest and principal due on a bond.

China's first publicly-known default was in March when Chaori Solar defaulted on interest payments due on a bond issued on the Shenzhen exchange, a far smaller venue.

Huatong issued 400 million yuan ($64.48 million) in one-year short-term bills in July last year.

$1 = 6.2035 Chinese Yuan Reporting by Pete Sweeney; Editing by Richard Borsuk

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