Two more bond defaults have triggered cross protection clauses

category:Finance
 Two more bond defaults have triggered cross protection clauses


According to the announcement, the default of the two bonds has objectively triggered the agreed situation of cross protection clauses, but there is a grace period of 10 working days after the triggering situation occurs. Wind information shows that at present, Yongmei holdings still has 21 bonds with a total principal of 21.41 billion yuan, and Henan energy chemical has 18 existing bonds with a total principal of 20.53 billion yuan.

Previously, CICC has issued a research report that Yongmei holding company and Yuneng Chemical Co., Ltd. have set up cross protection clauses for the public debt of 26.5 billion yuan. Among them, there are 15 bonds in total, with a scale of 15 billion yuan, and 10 bonds of Henan Energy Chemical Co., Ltd., with a scale of 11.5 billion yuan. In the view of many industry insiders, if cross default occurs, it will undoubtedly cause further pressure on the cashing ability of corporate bonds.

The so-called cross default mainly refers to that if the debtor under the contract defaults under other loan contracts, it will also be regarded as a breach of this contract. This means that if the company fails to repay in full within the grace period after triggering the cross protection clause, it will also face more serious bond default risk.

In this regard, Yongmei Holdings said in the announcement that it would try its best to reach a settlement with investors within the grace period, and would cooperate with the lead underwriter to carry out relevant compliance work in accordance with the cross protection provisions. In addition, in terms of follow-up work arrangements, Yongmei Holdings said that it would actively negotiate with all parties on proper debt solutions, strive to reach a debt extension or settlement scheme, and strive to raise repayment funds through various measures such as external financing, asset disposal, cost reduction and seeking external support from various parties during the grace period, and will fully cooperate with the lead underwriter to hold bond holders Meeting to discuss the follow-up relief measures and safeguard the rights and interests of the holders.

In addition, the association of dealers has launched three self-discipline investigations on the default of permanent coal bonds, which has a great impact on the bond market in the near future. The latest result is that on the evening of November 24, the China Association of interbank market dealers said that the self-discipline investigation on Yongmei holdings had been basically completed. According to the relevant requirements of the opinions of the peoples Bank of China, the China Securities Regulatory Commission and the development and Reform Commission on Further Strengthening the law enforcement work of the bond market, the clues of suspected violations of laws and regulations of Yongmei holdings found in the self-discipline investigation have been transferred to the securities regulatory authorities through the relevant departments. In the next step, the dealers association will push forward the self-discipline punishment on Yongmei holdings in accordance with the procedures. At the same time, Henan Energy Chemical Group Co., Ltd., the parent company of Yongcheng Coal Holding Co., Ltd., was also found to be involved in relevant violations, and self-discipline investigation has been launched. Source of this article: Guo Chenqi, editor in charge of first finance and Economics_ NBJ9931

In addition, the association of dealers has launched three self-discipline investigations on the default of permanent coal bonds, which has a great impact on the bond market in the near future. The latest result is that on the evening of November 24, the China Association of interbank market dealers said that the self-discipline investigation on Yongmei holdings had been basically completed.