July 23, 2014 / 7:20 AM / 3 years ago

Chinese construction firm has raised sufficient funds to avoid landmark bond default - sources

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SHANGHAI, July 23 (Reuters) - China's Huatong Road & Bridge Group Co Ltd managed to avoid a landmark bond default at the last minute on Wednesday, raising enough funds to pay off both principal and interest on a 400 million yuan ($64.51 million) bond due by the end of the day, sources directly involved in the issue told Reuters.

However, the sources, who spoke on condition of anonymity, said that while the money deposited in an escrow account with Shanghai Clearing House would be sufficient to pay off the bondholders, the company might not make a formal announcement of the fact on Wednesday.

The sources told Reuters that aggressive fundraising by Huatong, combined with money contributed from local government bodies in Shanxi province where Huatong is based, managed to allow Huatong to dodge what would have been the first-ever public default in China's interbank bond market, and the first time a Chinese company defaulted on a bond principal in China.

The company was not immediately available for comment.

Reports of the looming default have further dinged sentiment in China's already sensitive market for lower-rated private bond issuers. ($1 = 6.2010 Chinese Yuan) (Reporting by Pete Sweeney and the Shanghai Newsroom; Editing by Kim Coghill)

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