Beijing-based conglomerate China Energy Reserve and Chemicals Group has missed a repayment on a $350 million bond, continuing a growing trend of Chinese companies stumbling over debt obligations.
The company pointed to the “tightening in credit conditions” imposed by Beijing in recent years as the primary cause of the default, which had culminated in a “liquidity crunch” as financing channels were cut off.
The group plans to continue its business operations while it addresses its short-term cash flow issues, the Wall Street Journal reports, but this latest default has created concerns that future installments could also be in jeopardy.
Default provisions have now been set up on $665 million of the company’s other fixed-income securities due to mature in 2021 and 2022.