China’s CEFC set to meet bond interest payment

Bloomberg

Beleaguered CEFC China Energy Co. is set to meet an interest payment on a dollar bond, just days after defaulting on a separate debt obligation in the domestic market and as more of the once-promising energy conglomerate’s ambitious deals fail.
Bank of Communications Trustee Ltd., the trustee for the $250 million of dollar bonds issued by CEFC Shanghai International Group Ltd., owned by privately-held CEFC, has received payment for a coupon, according to people familiar with the matter, who are not authorised to speak publicly and asked not to be identified. The unit failed to repay a 2 billion yuan ($313 million) bond, triggering a technical default on its dollar notes.
“Usually the offshore issuers will keep some cash or bond proceeds in offshore bank accounts for interest payment and expenses for overseas operations,” said Ivan Chung, head of Greater China credit research at Moody’s Investors Service in Hong Kong. “It does not necessarily mean that the offshore bonds are safe. CEFC has already defaulted in onshore market and it is unlikely to do refinancing. Moreover creditors may take legal actions at any time.”
The interest payment of about $7.4 million is tiny compared with the 30.8 billion yuan of outstanding bonds at the sprawling company, which rose from obscurity in recent years to become a conspicuous player in global energy through a series of mega deals across Eastern Europe and the Middle East. As financial woes emerged and Chairman Ye Jianming came under investigation, CEFC has sold assets and witnessed the collapse of its pursuits — the most high-profile being a $9 billion stake in Rosneft PJSC.
The company relied heavily on bond sales for funding over the past two years, and it has 9.8 billion yuan of debt maturing this year.