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On Wednesday, China SCE failed to pay an instalment of $61mn under its syndicated loan agreement, which triggered a default event for its offshore dollar bonds. As a consequence, the company suspended trading in its four dollar bonds namely 7.375% 2024s, 5.95% 2024s, 7% 2025s and 6% 2026s with a total worth of $1.8bn from Thursday. According to the announcement, the company indicated that its liquid cash and bank deposits may not be sufficient to meet its current and future obligations. The company added that it had plans to appoint external advisers to evaluate its capital structure and explore options.
Moody’s downgraded China SCE’s CFR to Ca from Caa1 and its senior unsecured debt to C from Caa2, as a result of SCE missing its debt payments. Moody’s also maintained a negative outlook citing weakening liquidity and weak recovery prospects.
China SCE dollar bonds continue to trade at distressed levels of 4-6 cents on the dollar.
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