The Yanbian Rural Bank in northeastern China’s Jilin province has quietly defaulted on an interest payment for a public bond, reports Caixin. The bank failed to notify investors, fueling fresh concerns about the health of the country’s small banks.
The bank missed a scheduled Nov 22 interest payment on a RMB 300 million ($42.4 million) 10-year bond issued in 2017 to supplement its Tier 2 capital. As of Thursday, no payment had been made, and neither the bank nor its lead underwriter, Donghai Securities, had issued a notice about a delay or default.
The omission, which analysts described as a “silent default,” marks the first time in China’s bond market that a borrower has failed to make a credit bond payment without any public explanation, and underscores the hidden risks in China’s efforts to restructure its sprawling rural banking system.