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China steelmaker defaults after chairman’s death

Beijing / Bloomberg

A Chinese steelmaker whose chairman was found dead by hanging last month defaulted on bonds a second time in two weeks.
Dongbei Special Steel Group Co., based in the northeastern city of Dalian, said it missed payment on 1.01 billion yuan ($156 million) of principal and interest on notes due Tuesday, according to a statement posted on Chinamoney’s website. It sold the 90-day commercial paper with a face value of 1 billion yuan and a 6 percent coupon in January. The company failed to make a 852 million yuan bond payment on March 28, days after disclosing that its chairman, Yang Hua, was found dead by hanging at his home.
Chinese firms are struggling with surging debt burdens as Premier Li Keqiang seeks to weed out zombie corporations amid the country’s worst economic slowdown in a quarter-century. At least 12 companies have defaulted on bonds in the past two years even as the central bank loosened monetary policy.
Nanjing Yurun Foods Co., a sausage maker, and Zibo Hongda Mining Co., an iron ore miner, both said they defaulted on notes last month.
The company cited its rising inventory and sluggishness in the steel industry as reasons for missing payment, in the statement Tuesday.
Minister of Human Resources Yin Weimin said Feb. 29 about 1.8 million steel and coal workers will be laid off as the country cuts industrial overcapacity and reforms bloated state-owned enterprises.

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