An airport operator under the umbrella of China's debt-laden HNA Group technically defaulted on bond payments after it failed to repay the principal on a commercial paper issue by the Friday deadline. The Shanghai Clearing House said on Monday it had received interest and principal payments from Haikou Meilan International Airport Co Ltd after the deadline.
Haikou Meilan said the delay was due to a technical issue. It brings to 19 the number of companies that have defaulted on bond payments so far this year, and follows a default by beleaguered Dandong Port Group Co Ltd.
The 19 companies have defaulted on 39 bonds worth a total of 44.2 billion yuan ($6.43 billion) this year, adding to worries about risks to the economy as growth slows and a trade war with the United States intensifies. The list of bond defaults includes a rare missed payment by a local government financing vehicle. Xinjiang Production and Construction Corps (XPCC) Sixth Division State-Owned Asset Management Co Ltd missed bond payments totalling 521.8 million yuan due August 13, before making the payments two days later.
Amid the rise in defaults, Beijing has punished one of the country's top ratings agencies, with two regulators criticising the company for providing expensive consultation services to firms for which it also issued credit ratings. While China has moved to ease credit conditions and encourage investment in corporate bonds to support struggling private firms amid signs of slowing economic growth, corporate issuers have not been the main beneficiaries of these policies.
Despite the relatively high number of cases this year, China's policymakers have said that the default rate remains much lower than in many other countries, and that risks in the bond market are generally controllable.
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