Aug 06, 2024 04:59 AM
FINANCE
State-Backed Leasing Firm Misses $55.9 Million Bond Payment
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Many of Shanghai Industrial Financial Leasing’s clients are LGFVs in Guizhou, one of China’s most leveraged provinces in the southwest
Shanghai Industrial Financial Leasing Co. Ltd., a state-backed leasing firm and a major funding source for local government financing vehicles, has missed the interest and principal payments on a 400-million-yuan ($55.9 million) private placement bond, highlighting the company’s deepening debt woes.
On Aug. 1 the company warned it might be unable to repay a bond maturing on Aug. 3 after negotiations to secure bondholders’ support for an extension failed. With a coupon rate of 7.00%, the total principal and interest due is 428 million yuan. Since Aug. 3 falls on a weekend, the actual payment date is Aug. 5.
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- Shanghai Industrial Financial Leasing Co. Ltd. missed a 400-million-yuan bond payment due to failed negotiations and debt issues, totaling 428 million yuan with interest.
- The company has substantial debt, including 7.5 billion yuan in liabilities and 5.8 billion yuan in overdue projects in Guizhou.
- Efforts are being made to recover funds, including expediting receivables and property sales, while actively negotiating to protect bond investors' interests.
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Who’s Who
- Shanghai Industrial Financial Leasing Co. Ltd.
- Shanghai Industrial Financial Leasing Co. Ltd. is a state-backed firm facing deepening debt issues, having missed interest and principal payments on a 400-million-yuan bond. Known for funding local government projects, particularly in Guizhou, it has a total liability of 7.5 billion yuan. The company is working on recovering funds through expedited repayment of receivables and property sales, while negotiating with bond trustees to protect investors.
- Golden Power Group Ltd.
- Golden Power Group Ltd. is a Guizhou government-backed power company and a major shareholder of Shanghai Industrial Financial Leasing Co. Ltd. The company opposed the extension of a bond repayment, which led to the failure of negotiations to secure support for the extension.
- Shanghai Industrial Investment (Holdings) Co. Ltd.
- Shanghai Industrial Investment (Holdings) Co. Ltd. is a major shareholder in Shanghai Industrial Financial Leasing Co. Ltd., which is backed by the Shanghai government. The company has played a significant role in public transit and urban investment projects and was involved in extending financing to urban investment companies. Former president Zhou Jun, introduced several financing deals, is under graft investigation for embezzlement and bribery.
- Shanghai Pudong Development Bank Co. Ltd.
- Shanghai Pudong Development Bank Co. Ltd. is a principal lender to Shanghai Industrial Financial Leasing Co. Ltd., providing 2.2 billion yuan in on-balance-sheet loans and over 2 billion yuan in off-balance-sheet borrowings.
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What Happened When
- Before 2017：
- Shanghai Industrial Financial Leasing Co. Ltd. gained prominence by financing subway and urban rail projects in Shanghai, Wuxi, Nanchang, and Nanning.
- November 2023：
- Zhou Jun, a former president of Shanghai Industrial Investment, was placed under graft investigation.
- As of June 30, 2023：
- Shanghai Industrial Financial Leasing's total liability stood at 7.5 billion yuan, with 5.5 billion yuan being interest-bearing, and 1.6 billion yuan due within a year.
- July 26, 2024 - July 31, 2024：
- Shanghai Industrial Financial Leasing held meetings with bondholders seeking an extension of the repayment.
- August 1, 2024：
- Shanghai Industrial Financial Leasing warned it might be unable to repay a bond maturing on August 3, 2024.
- August 3, 2024：
- The bond payment date (as the due date fell on a weekend, the actual payment date is August 5, 2024).
- August 5, 2024：
- Shanghai Industrial Financial Leasing missed the interest and principal payments on a 400-million-yuan private placement bond.
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