China conglomerate's debt woes worsen after missing bond payment

The move is the latest in a series of measures by the Shanghai government to strengthen its regulation of the city's property market.

SHANGHAI: Chinese state-linked conglomerate Citic Guoan Group Co. missed a bond payment for the first time as a flurry of asset seizures stymied its liquidity.

The Shanghai Clearing House said it didn’t receive funds for the coupon payment on a 3 billion yuan ($446 million) bond from Citic Guoan that was due Sunday. 

The note doesn’t have a grace period, according to the bond document. The delinquency came after almost all of its stakes in three listed companies were pledged or frozen, China Lianhe Credit Rating said in a report April 26. 

A Citic Guoan officer responsible for bond issuance declined to comment.

A worsening liquidity crunch is sweeping through some of the biggest Chinese conglomerates like Citic Guoan, underscoring concerns that the funding pain is far from over despite bouts of stimulus measures.

 Bonds from at least 44 companies totaling $42.9 billion face repayment pressure, a 23 percent jump from the tally at end-March, data compiled by Bloomberg show.

With at least 15 billion yuan of onshore bonds outstanding, the company, whose businesses range from financial investment to real estate, is being closely watched by investors. It has accumulated total liabilities of 178.3 billion yuan as of Sept. 30, according to its latest financial results.

Citic Group sent a letter to China Banking and Insurance Regulatory Commission to seek assistance to resolve a “liquidity risk” for Citic Guoan, Time Weekly reported earlier this month, citing a document from Citic Group. 

Citic Guoan missed a first quarter interest on a 2.5 billion yuan financing and Bank of Beijing Co., the guarantor for the debt, has made the payment instead, the lender said in an exchange filing.

The firm was a wholly-owned subsidiary of Citic Group when it was set up in the 1980s. In 2014, Citic Group’s stake was cut to about 21 percent after Citic Guoan introduced five strategic investors including Tianjin Wanshun Real Estate Co. - Bloomberg