A Chinese state-backed technology group is the latest company to default on a domestic bond issue, denting Beijing’s ambitions to build a “self-reliant” semiconductor sector and further agitating the world’s second largest bond market, reported the Financial Times.
Unigroup International Holdings said in a statement to the Hong Kong stock exchange that semiconductor company Tsinghua Unigroup “was not able to redeem” its RMB 1.3 billion ($198 million) bond due on November 16, triggering a default.
Tsinghua Unigroup, a national champion, is ultimately controlled by Beijing-based Tsinghua university, China’s most prestigious engineering school. The company has received tens of billions of dollars in government support as President Xi Jinping’s administration ramped up efforts to wean the domestic semiconductor sector off US technology, said the FT.
The National Association of Financial Market Institutional Investors said it had discovered issues of “inadequate implementation of rules, imperfect internal control mechanisms and irregular business operations” during debt issuance by market institutions. It added that some had “emphasized business development and neglected compliance”.