Bright prospects? China's rooftop solar goal looks too ambitious

[AlphaQuant]

Finally happened - prob the first of quite a few small, non-core firms as PBOC sends a warning signal over over-easy credit that there's no definite backstop.

"Shanghai Chaori Solar Energy Science & Technology Co. (002506) failed to pay full interest due today on onshore bonds, the first default in China at a time when a growing number of companies are struggling with debt.

The maker of energy cells to convert sunlight into power is trying to sell some overseas plants to raise money to repay the debt, Vice President Liu Tielong said in an interview today at the company’s Shanghai headquarters. The company said on March 4 it will only be able to pay 4 million yuan ($653,990) of an 89.8 million yuan coupon due today on the notes."

Also interesting extract from Businessweek: Total debt of publicly traded non-financial companies in China and Hong Kong has surged to $1.98 trillion from $607 billion at the end of 2007, according to data compiled by Bloomberg. Some 63 have a debt-to-equity ratio exceeding 400 percent, compared with the average of 73 percent. Renewable energy, materials, household appliances and software companies dominate the rankings.

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http://www.bloomberg.com/news/2014-03-07...-says.html

[CityFarmer]

The article was posted before. I merged your post into the old thread. I will not relate this with shadow banking of China, but a ill-fated business venture on a wrong sector at the wrong time...

Finally happened - prob the first of quite a few small, non-core firms as PBOC sends a warning signal over over-easy credit that there's no definite backstop.

"Shanghai Chaori Solar Energy Science & Technology Co. (002506) failed to pay full interest due today on onshore bonds, the first default in China at a time when a growing number of companies are struggling with debt.

The maker of energy cells to convert sunlight into power is trying to sell some overseas plants to raise money to repay the debt, Vice President Liu Tielong said in an interview today at the company’s Shanghai headquarters. The company said on March 4 it will only be able to pay 4 million yuan ($653,990) of an 89.8 million yuan coupon due today on the notes."

Also interesting extract from Businessweek: Total debt of publicly traded non-financial companies in China and Hong Kong has surged to $1.98 trillion from $607 billion at the end of 2007, according to data compiled by Bloomberg. Some 63 have a debt-to-equity ratio exceeding 400 percent, compared with the average of 73 percent. Renewable energy, materials, household appliances and software companies dominate the rankings.

*****************

http://www.bloomberg.com/news/2014-03-07...-says.html

[Greenrookie]

Chaori defaults on bonds interest paymeynt

http://sg.news.yahoo.com/chinas-first-co...nance.html

Not sure if this has been posted before. Wonder how much more defaults are in the shadow? Thought this might explain why YZJ is so weak despite a neutral- strong FY showing.

[AlphaQuant]

Not sure if this has been posted before. Wonder how much more defaults are in the shadow? Thought this might explain why YZJ is so weak despite a neutral- strong FY showing.

It was posted in another thread already so Cityfarmer prob has to merge it. Zerohedge has a decent writeup on this - but as typical of ZH, it tends to be rather sensationalistic. BoA has claimed this will lead to a "Lehmans style collapse" which i find ludicrous - the whole system is closed and PBoC is firmly in charge but there will quite certainly be a mini-shakeup.

http://www.zerohedge.com/news/2014-03-06...als-pulled

[Greenrookie]

Not sure if this has been posted before. Wonder how much more defaults are in the shadow? Thought this might explain why YZJ is so weak despite a neutral- strong FY showing.

It was posted in another thread already so Cityfarmer prob has to merge it. Zerohedge has a decent writeup on this - but as typical of ZH, it tends to be rather sensationalistic. BoA has claimed this will lead to a "Lehmans style collapse" which i find ludicrous - the whole system is closed and PBoC is firmly in charge but there will quite certainly be a mini-shakeup.

http://www.zerohedge.com/news/2014-03-06...als-pulled

Hi alphaquant,
How would a closed system with PBOC in charge help prevent a Lehman style crisis? Because they can print money and shift the bad loans to some other entity?

Why Amercia don't do that? Is the Lehman problems too "amplify" due to the derivatives ?

[AlphaQuant]

How would a closed system with PBOC in charge help prevent a Lehman style crisis? Because they can print money and shift the bad loans to some other entity?

Why Amercia don't do that? Is the Lehman problems too "amplify" due to the derivatives ?

well i think I'll get blasted for the following post but anyway:

If you read Paulson's memoirs
http://www.amazon.com/On-Brink-Inside-Co...B006CDD6K0

or listened to Paulson/Geithner, i think you will sense a "hmm was it right to let Lehman's fail". They decided to let Lehmans fall because it was morally wrong to save it, but after failing, they realised there was a massive freeze in credit since now noone dared to lend to anyone - afterall if lehman is not safe then who is?? And so after that they saved anyone that came their way - AIG, Freddie etc. And look how much the Fed has pumped into the system since 2008? So you have to wonder if pumping X into Lehmans might be the easier way to solve it - but of cos this might have just prolonged the inevitable anyway. Also you have the problem of congress where you need the 2 parties to agree to the use of funds and so you can read abt the difficulty of getting even TARP up and running. So in 2008 it was morally wrong and politically difficult to pump money to save Lehmans (and then when dirt hits the fan the Fed pumped a few mutiples of TARP and is still printing away). If Paulson/Geithner/Bernanke/Congress can go back in time, i'm not sure they will still let Lehmans go. This is of cos, hindsight talk.

In China, the governor of PBoC is a member of CCP. If there's a risk of a blowup and after seeing what happened to the US, i think the Chinese will be the last blokes to worry abt moral hazards - you hear during the recent NPC - employment +stability is the topmost concern. If CCP says print/nationalise, is there some other bloke who will oppose? So a large scale meltdown is highly unlikely, esp if it involves its banks short of RMB - the blokes will just print without any obstructions - a mini-shakeup is another story.