Bond Market News

Offshore bondholders of China’s Tsinghua Unigroup, the chipmaker that defaulted on local bonds last year, are seeking a freeze on the company’s foreign assets to prevent the sale of those assets to prioritize payments to local bondholders. The company’s default on CNY 1.3bn ($199mn) worth of onshore bonds on November 16 last year triggered a cross default on its $1.05bn 4.75% bonds due 2021, $750mn 5.375% bonds due 2023 and $200mn 6.5% bonds due 2028. Tsinghua Unigroup is backed by prestigious state-owned institute Tsinghua University. The asset freeze has been requested by a group of lawyers representing a Hong Kong-based group of bondholders, as per FT. A person familiar with the matter said, “If we manage to do that, then those [assets] shouldn’t go into the onshore restructuring.” The company, led by chair Zhao Weiguo, has made several high-profile investments in foreign assets during his tenure including its $2.6bn acquisition of France’s Linxens in 2018 and its $2.3bn stake purchase of HP’s H3C in 2016. Tsinghua’s 5.375% 2023s and 6.5% 2028s are trading at ~30 cents on the dollar on the secondary markets.

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