China state enterprises facing debt problems

Chinese banks and fund managers dumped their holdings of riskier bonds last week after a series of credit shocks involving state-owned enterprises (SOEs) jolted China's corporate bond market.

Below is a list of SOEs whose debt problems in recent weeks have raised concerns among investors.

Defaults have been mainly concentrated in traditional industries, including coal and automobiles.

Yongcheng Coal & Electricity Holding Group

Yongcheng Coal & Electricity Holding Group Company Limited said in a statement that it failed to make principal and interest payments on 1 billion yuan ($152 million) in maturing commercial paper, just weeks after raising 1 billion yuan through a debt issue.

Yongcheng is a wholly state-owned company mainly engaged in the investment and management of coal, electricity, railway, chemical and mining.

The company is a unit of Henan Energy and Chemical Industry Group Company Limited, and is ultimately controlled by the Henan provincial State-Owned Assets Supervision and Administration Commission.

Huachen Automotive Group

Huachen Automotive Group, a key state-owned enterprise owned by the government of Liaoning province, defaulted on a 1-billion-yuan bond last month, citing financial strain.

The company is the parent of Brilliance Automotive Holdings 1114.HK, the Chinese joint venture partner of BMW BMWG.DE. Huachen said on Monday that creditors had applied to a Chinese court to restructure the company.

Huachen has a total of 47,000 employees and assets of more than 190 billion yuan, it said on its website.

Tsinghua Unigroup

Investors dumped bonds last week issued by state-backed integrated circuit maker Tsinghua Unigroup Ltd, following a debt warning from a rating agency.

China Chengxin International Credit Rating ("CCXI") downgraded Tsinghua Unigroup's credit rating to AA from AAA and continued to include it in a watch list for possible downgrades.

CCXI said Unigroup's debt repayment was still uncertain as the company faced significant pressure collecting funds to repay maturing debts, and as there had been no material progress in its strategic restructuring.

Tsinghua Unigroup, founded by China's prestigious Tsinghua University in Beijing, is a digital infrastructure and services company with a focus on electronic components and equipment manufacturing. The company had nearly 40,000 employees at the end of 2018.

Tsinghua Unigroup has several core subsidiaries, including Unisplendour Corporation Limited 000938.SZ and Unigroup Guoxin Microelectronics Co 002049.SZ.