http://www.bloomberg.com/news/articles/2016-05-22/lost-seals-and-other-excuses-used-by-defaulting-chinese-firms
Missing corporate stamps, shuffled assets and disappearing executives have become the hallmarks of debt distress in China. Investors are starting to lose patience.
China Shanshui Cement Group Ltd. said this month it couldn’t distribute interest without its company seal, only for the underwriter to report payment later saying the stamp isn’t needed. Shenyang City Utility Group Co. said it couldn’t publish a repayment statement as the holder of its chop was traveling. China City Construction Holding Group Co.’s bonds slumped to 79 yuan out of 100 yuan face value on May 6 after its controlling shareholder changed. Fosun International Ltd. was among issuers to report lost contact with executives.
A lack of transparency and protections in bond documentation are adding to the angst among investors in China, where a record 10 companies have failed to make payments this year amid the weakest economic growth in a quarter century. This has prompted authorities to tighten regulation and scrutinize underwriters’ due diligence work.
“The bizarre defaults may discourage foreign investors from entering China’s corporate bond market,” said Wang Ying, a senior analyst at Fitch Ratings in Shanghai. “The internal corporate management of some companies is in chaos. It’s a typical phenomenon at an early stage of a bond market.”
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