Solar panel maker Shanghai Chaori Solar Energy Science & Technology has defaulted on interest payments owed on its bond, say media reports quoting the firm.
It is the first Chinese firm ever to default on its onshore corporate bonds.
On Tuesday, the firm warned it would be unable to make a 89.8 million yuan ($14.6m; £8.7m) interest payment on a one billion yuan bond issued in 2012.
The default is seen as a test case for the Chinese government.
Investors have assumed in the past that the Chinese government would bail out any Chinese corporation in danger of defaulting.
The move to allow Chaori to default signals a new stance.
“There’s never been a corporate bond default, [so] investors have been conditioned that there is no such thing as risk in China,” Leland Miller, president of research firm China Beige Book, told the BBC.
“The Chinese leadership is trying to break down this misunderstanding that everything is backstopped.”
Chaori Solar said it planned to pay 4 million yuan ($654,000) of the interest payment due on the billion yuan bond, which was taken out two years ago.
via BBC News – Chaori Solar in landmark Chinese bond default.
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