Several mutual funds with exposure to Peking University Founder Group’s bonds plunged after Founder defaulted last week on a RMB 2 billion ($285 million) bond. Meanwhile, as a deadline for repaying investors drew near, Founder’s largest shareholder made a move that could affects the company’s ability to resolve the crisis, reported Caixin.
PICC Asset Management, which manages several bond mutual funds with exposure to Founder’s bonds, said it will lower its funds’ valuation based on prices quoted by China Central Depository & Clearing Co. (CCDC). The value of Founder’s defaulted bond plunged more than 70% Dec. 3, the day after the Chinese industry and investment conglomerate failed to repay it, according to CCDC. The value of Founder’s other bonds also took a hit.
With four days left in a 15 business-day grace period for repaying investors, it’s not clear whether Founder will be able to raise enough cash to do so as it pledged. Meanwhile, Beijing Peking University Asset Management, which holds 70% of Founder Group, unilaterally said Tuesday it will take over Founder’s real estate unit.
Several of Founder’s bondholders voiced concerns after seeing the news. “We are worried that Founder’s shareholders are trying to divest the more profitable real estate unit, which will hurt creditors,” a bondholder told Caixin.