SHANGHAI, March 20 The Shanghai Stock Exchange
ordered loss-making Chinese solar cell maker Baoding Tianwei
Baobian Electric Co Ltd to temporarily delist its
2011-issued "11 Tianwei Bond" from Friday, the
A filing to the exchange on Thursday did not explain the
suspension and the company could not be reached immediately for
The suspension follows news earlier this month of China's
first domestic bond default, triggered when solar equipment
producer Shanghai Chaori Solar Energy Science and Technology Co
Ltd could not make an interest payment.
Chinese authorities have signalled that they are now more
willing to let banks and other investors take losses on loans,
raising doubts about the long-held assumption that bonds carry
an implicit government guarantee.
Trading in the Tianwei Baobian bond has been suspended since
the firm announced on March 10 that it had posted a loss of 5.23
billion yuan ($844.51 million) for 2013 for the second straight
year of losses. Two years of losses meant the Shanghai exchange
could demand the bond's listing is suspended.
The "11 Tianwei Bond" was issued in 2011 with a coupon of
5.75 percent. Due to mature in 2018, the bond's total value is
1.6 billion yuan ($258.21 million), Reuters data shows.
By the time trade was suspended on March 11, the bond's
yield had shot up to 11.26 percent from 6.61 percent at the
start of the year.
The company said in a filing on March 13 it will pay
interest on the bonds owed from July 11, 2013 to July 10, 2014.
It said those payments would be made by July 11 this year.
A massive run-up in China's corporate debt since 2008 - and
overcapacity in sectors such as steel, coal and solar - have
raised concerns about the country's credit risks.
Small property developer Zhejiang Xingrun is struggling with
payments of up to 3.5 billion yuan to banks and individual
investors, domestic media reported, citing officials.
China's solar industry has suffered from severe overcapacity
and falling prices for photovoltaic cells, while the government
has been embroiled in a trade war with the United States and the
Shanghai exchange has not given Tianwei Baobian a "buffer"
period for trading the bond. In similar cases before,
authorities gave issuers a grace period of trading before the
listing was formally suspended.
The "11 Chaori Bond" was given a 30-day grace
trading period before being temporarily delisted on July 8 last
(Reporting by Adam Jourdan; Editing by Neil Fullick)