China's HITIC misses interest payment on Samurai bond

Asian Economic News, Oct 2, 2000

HONG KONG, Sept. 26 Kyodo

A Chinese investment firm owned by the government of Hainan Province has missed the Monday deadline for payment of interest on its seven-year Samurai bond, local media and financial sources said Tuesday.

Although Hainan International Trust & Investment Corp. (HITIC) still has a further two weeks to make the payment on the yen-denominated bond worth 14.5 billion yen issued in 1997, it remains uncertain whether it will make it, the sources said.

It was HITIC's second failure to make interest payments on time, following a case in late June in which the Chinese nonbank moneylender delayed payment on a different Samurai bond for a full month and was deemed close to declaring a default.

The Hainan provincial government is planning to consolidate the eight financial institutions under its control, including HITIC, but it would be a blow to China's external credit if it allows HITIC to default, the sources said.