China Miner Zibo Hongda Defaults on Bond, Hurt by Economy Slump

A Chinese mining company defaulted on its bonds, the latest firm to have trouble with financing as an economic slump hurts business.

Zibo Hongda Mining Co., which is based in the eastern province of Shandong, said it didn’t raise enough funds to make its full debt payment due March 8, according to a statement posted to the Shanghai Clearing House Clearing House A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e A clearing house is defined as an intermediary between two parties, a buyer and seller, which helps facilitate the overall process from trade inception to settlement. Clearing houses streamline the exchange of payments, securities, or derivatives transactions.The clearing house is situated between two clearing firms who also helps reduce the risk of either member firm failing to honor their respective trade settlement obligations.Buyers and sellers enter into legally binding agreements for the e Read this Term website. The iron ore miner issued 400 million yuan ($61 million) of notes in 2015 with a coupon rate of 8 percent and had to repay 431.91 million yuan in principal and interest Tuesday.

Chinese mining companies are struggling as President Xi Jinping pushes to reduce pollution and cut industrial overcapacity amid the worst economic slowdown in a quarter century. Some banks have withdrawn loans to Zibo Hongda, increasing the company’s Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term shortage, according to a statement from Dagong Global Credit Rating Co. on March 1 posted on the Chinamoney website.

“Demand from the company’s customers, mainly steel firms, has been falling as they struggle due to overcapacity,” said Ji Weijie, a bond analyst at China Securities Co. in Beijing. “Industries with overcapacity problems have very high credit risks, especially those companies not backed by the government.”

At least 10 companies have reneged on bond obligations in the past two years even as the government loosened monetary policy and allowed more companies to sell notes in the onshore market.

Zibo Hongda said it will try to raise money through multiple channels to repay the debt, according to its statement. Two calls to the firm’s main number went unanswered Wednesday.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net, Ling Zeng in Shanghai at lzeng30@bloomberg.net. To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Ken McCallum

By: Bloomberg News

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