Chinese Junk Bonds Fell After Cloud Live Technology Group

As the nation braces for its second onshore corporate default, the company said it will miss payments. The yield on solar-cell maker Baoding Tianwei Baobian Electric Co.’s notes due 2018 climbed seven basis points to 7.49 percent after Cloud Live’s statement late Monday, according to exchange data. Fertilizer company Inner Mongolia Nailun Group Inc.’s 2018 bonds surged 50 basis points to 21.06 percent. Higher-graded securities showed little reaction.


President Xi Jinping’s anti-graft probe and the slowest economic growth since 1990 are stoking default concerns a year after Shanghai Chaori Solar Energy Science & Technology Co. became the first company to default on onshore bonds. Companies in Asia’s largest economy need to repay 1.5 trillion yuan ($242 billion) of local-currency notes in the period to June 30, the most for a quarter in Bloomberg data going back to 1998.

Cloud Live, the Beijing-based big data provider, which shifted into that industry in July after corruption probes hurt its former restaurant business, will fail to meet an April 7 deadline to pay investors who had exercised an option to sell back notes, the company said in statements to the Shenzhen stock exchange on Monday. Failure to pay would constitute the second default on an onshore yuan debenture.

Cloud Live’s shares rose 8.6 percent to 8.30 yuan per share as of 11:30 a.m. in Shanghai.

This isn’t the first time efforts to clean up the world’s second-biggest economy have touched the company. Cloud Live was formerly Beijing Xiangeqing Co., which operated a chain of restaurants. It said in July it was shifting into the Internet business and changed its name in August.

The company’s abrupt turn into the “totally unrelated” information-technology industry came after it shuttered some stores in 2013, according to a documentary on Xi’s anti-graft drive that aired on the official China Central Television on Dec. 17.



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