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Chinese Solar Company Defaults On Bond

It is well known that China has been going through some difficult trading times as far as solar panels are concerned, becoming embroiled in trade wars with the likes of the USA and countries within the European Union. However, it was only last month that we commented on what, at that time, appeared to be a world breaking record for the amount of solar capacity installed last year in China

China has been going through a difficult trading period for solar panels

Therefore, it is concerning to hear about a Chinese solar company apparently defaulting on a bond at a time when it seemed that China may have been “seeing the light at the end of the tunnel”.

Shanghai Chaori Solar Energy Science & Technology Co Ltd is a Chinese company involved in solar power. Their main interest is involved in researching, manufacturing and the sale of solar cell modules.

Apparently, the company has been unable to meet an interest payment of 89.8 million yuan (around £8.7 million) on a corporate bond of 1 billion yuan (almost £98 million) that it took out back in March 2012 for a period of 5 years. This is the first time that there has ever been a default on a corporate bond issued in China. It is reported that the company paid only 4 million yuan (around £391,000) of the interest payment.

It remains to be seen if the government in China step in to assist in some capacity as it has done within the solar panel sector in other ways bearing in mind the importance the solar sector has to China and of course the rest of the world. It will be interesting to see if the above leads other companies in China to default on such bonds.

Apparently, the company could sell some of its solar farms in different parts of the world to raise funds as the value of these would far outweigh the amount outstanding on the interest payment.

We will continue to monitor developments.

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