UPDATE 1-CEFC Shanghai International defaults on $327 mln in bond payments

* Company fails to make bond payments of 2.09 bln yuan

* First bond default from company follows May 14 repayment warning

* Company cites ‘major changes’ to operations

* Says aims to make payments in six months (Recasts, adds details from statement, background)

By Andrew Galbraith

SHANGHAI, May 21 (Reuters) - CEFC Shanghai International Group Ltd, a subsidiary of troubled China CEFC Energy, said on Monday it missed bond payments totalling 2.09 billion yuan ($327.3 million), becoming the latest private Chinese company to default amid a crackdown on financial risk.

It is the first time the company has missed bond payments, and follows mounting concern about its ability to service its debts since February, when it was revealed that China CEFC Chairman Ye Jianming was under investigation for suspected economic crimes.

“There have been significant changes to the issuer’s production and operations, it has failed to raise funds in the amount required, and it is unable to repay principal and interest on (the bond) in time,” the company said in a statement posted on the website of the Shanghai Clearing House.

CEFC Shanghai said it planned to make the payments six months after the maturity date

The company “will maintain close communications with investors and relevant intermediaries, and will handle relevant work following the default and continue to disclose its progress,” its statement said.

The company warned on May 14 that it was uncertain it would be able to make the principal and interest payments on the 270-day super-short-term commercial paper that matured Monday, citing major pressure on operations.

At a recent meeting, bondholders voted overwhelmingly in favour of motions calling on CEFC Shanghai to give details of its finances, and to release a plan for repayment, according to a filing posted last week on the website of the China Foreign Exchange Trade System (CFETS).

The unrated issue had a coupon of 6 percent. At the time of the bond issue, CEFC Shanghai International had a AAA long-term credit rating from domestic ratings agency China Lianhe Credit Rating Co.

China Lianhe downgraded CEFC Shanghai’s rating to B on May 15, the fourth time it had downgraded the issuer’s rating in less than three months.

The default by CEFC Shanghai is the latest in a wave of corporate debt defaults amid a broad campaign to crack down on risky financing, and follows a reminder on Friday from China’s securities regulator that exchanges should monitor default risks.

“This is only an appetizer, (there are) more defaults to come,” said a fixed-income portfolio manager in Shanghai.

CEFC Shanghai has 12 outstanding bonds worth a total of 27.6 billion yuan, according to Reuters Eikon data, including bonds worth 8.1 billion yuan maturing this year. ($1 = 6.3855 Chinese yuan) (Reporting by Andrew Galbraith; Editing by Richard Borsuk)