… Few companies are more symbolic of the horrible year experienced by China’s private sector in 2018 than Chuying Agro-Pastoral Group. The pig breeder from Henan, a province in Central China’s Yellow River Valley, defaulted on a bond worth a total of 1.5 billion yuan (US$223 million) last year. It then made headlines in China in November when it offered to repay holders of debt it had defaulted on with ham or pork products. To compound matters, large numbers of its livestock starved to death, with the company not having the money to feed them, local media reported… 

 

 

China’s private companies making a pig’s ear out of paying their bills as economic slowdown bites

 

    Record numbers of Chinese firms are defaulting on their bonds, while also taking longer than ever to pay their suppliers, says trade credit insurer Coface

    A majority of companies expect lower growth this year, up from a third last year, as private sector bears weight of China’s slowdown

 

Finbarr Bermingham and Karen Yeung, South China Morning Post

14 Mar, 2019

 

Few companies are more symbolic of the horrible year experienced by China’s private sector in 2018 than Chuying Agro-Pastoral Group.

 

The pig breeder from Henan, a province in Central China’s Yellow River Valley, defaulted on a bond worth a total of 1.5 billion yuan (US$223 million) last year. It then made headlines in China in November when it offered to repay holders of debt it had defaulted on with ham or pork products.

 

To compound matters, large numbers of its livestock starved to death, with the company not having the money to feed them, local media reported.

 

“Nobody wanted the note to become overdue,” said Mr Liu, who works in the company’s bond department but who preferred only to provide his surname. “But since this has taken place already, we can only search for a method to reach a resolution and protect the rights of our bond holders.”

 

The company has warned that it is set to lose 3.3 billion yuan (US$491 million) this year, despite having turned a small profit in 2018, according to local media reports.

 

“In 2018, the pig breeding market wasn’t too good. We do not have an African swine flu problem within our company but the overall pig breeding industry in China was certainly affected by the swine flu problem,” added Liu.

 

“That is why in the second half of 2018, the pig breeding prices were so low.”

 

Chuying Agro-Pastoral’s situation is emblematic of an awful year all round for China’s private sector, which felt the brunt of a government drive towards deleveraging.

 

There is also a maelstrom of external factors over which companies have little control, including the US-China trade war and – in the case of the hog farming business at least – outbreaks of African swine flu.

 

China’s bleak private sector picture is laid bare by a report released on Thursday by trade credit insurer Coface that, above all else, illustrates the depths of the debt problems facing companies in China.

 

Record numbers of corporations are defaulting on their bonds, while companies are also taking longer than ever to pay their suppliers, as the private sector bears the wounds of a broad-based economic slowdown and a trade war that is weighing heavily on investment decisions.

 

As China’s economic growth slowed to 6.6 per cent last year, its corporate bond defaults quadrupled in value to US$16 billion, with the total number of bond defaults tripling to 119.

 

Meanwhile, fewer companies are being paid on time, with 40 per cent reporting that they have recorded an increase in payment delays, up from 29 per cent in 2018, Coface’s study showed.

 

In total, 62 per cent of Chinese companies experienced payment delays in 2018. Over the course of a year, the average time it took for Chinese companies to receive payment rose by 10 days to 86 days.

 

More worryingly, according to the insurer, is...

 

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https://www.scmp.com/economy/china-economy/article/3001524/chinas-private-companies-making-pigs-ear-out-paying-their