Stock Exchange Suspends Losing Solar Cell Bonds
The Shanghai Stock Exchange has ordered the Chinese solar cell maker Baoding Tianwei Baobian Electric Co. to delist its issued 11 Tainwei bond due to losses. The filing happened was done last Friday without any explanation of the suspension and the company still has to give out its comment.
The suspension of the bond came after the news earlier that stated China’s first domestic bond default has triggered as solar equipment producer Shanghai Chaori Solar Energy Science and Technology Co. was not able to make interest payments. This prompted authorities to allow more banks and investors to rake losses on loans which raised doubts on that long held assumption on the bonds can carry an implicit government guarantee.
Trading the Tainwei Baobian bond was suspended since its firm has announced and posted a loss of more than 5 billion yuan last March 10 in 2013, which was already its second year that it posted losses, which meant that the Shanghai exchange can demand the bond’s listing to be suspended.
The bond was issued in 2011 along with a 5.75 percent coupon and due to mature in 2018 with a total value of 1.6 billion yuan. By the time the bond trading was suspended the yield shot up to 11 percent from 6.6 percent during the start of the year. The company filing in March 13 stated that it will be paying interest on the bonds that is owed since July of 2013 to July 2014 and the payments will be done by July 11 of this year.