Defaults seen rising after Sinosteel misses payment

Delayed payment: Workers walk past Sinosteel’s headquarter building in Beijing. Sinosteel will delay the payment of interest to its bondholders due on Tuesday after it extended the date investors can start redeeming its bonds by a month. – Reuters

SHANGHAI: China bond defaults are forecast to climb after a state-owned steelmaker missed an interest payment, raising questions about the government’s commitment to stand behind such firms.

Sinosteel Co failed to pay interest due Tuesday on 2 billion yuan (US$315mil) of 5.3% notes maturing in 2017 after saying it will extend the deadline as it plans to add a unit’s stock as collateral. That came after the National Development and Reform Commission planned to meet noteholders and ask them not to exercise a redemption option on Tuesday to force full repayment, people familiar with the matter said last week.