Purple Group has defaulted on two bonds in one day, the RMB 5 billion corporate bonds due yesterday (10) and the USD 450 million (about NTD 12.8 billion) corporate bonds from abroad are unable to repay the principal and interest, which will trigger another USD 2 billion cross-default.
Purple Group said yesterday that due to liquidity constraints, the company was unable to raise sufficient funds as agreed and could not pay the principal and interest as scheduled.
Less than a month after Ziguang Group defaulted on its domestic bonds, Ziguang’s overseas US dollar bonds were also declared in default. Purple International announced that it would not be able to pay the principal and interest on the $450 million debt due on the 10th, while Purple Coresun said that a default on the above-mentioned U.S. dollar bonds would trigger a cross-default on its $2 billion issue.
Reuters reports that Ziguang International noted that the issuer and guarantors are studying various precautions to address the liquidity issues they are currently facing. Trading in the company’s U.S. dollar-denominated debt has been suspended since the afternoon of Nov. 18, and the suspension will continue, said ZiGuang XinSheng.
The US$450 million debt issued by Purple International bears a 6% coupon and is guaranteed by Tsinghua International, a subsidiary of Purple Group.
There are three tranches of U.S. dollar-denominated bonds issued by Purple Coresun totaling $2 billion, also guaranteed by Purple Group, including $1.05 billion in bonds due Jan. 31, 2021, $750 million in bonds due Jan. 31, 2023 and $200 million in bonds due Jan. 31, 2028.
Less than a month after Ziguang Group defaulted on its debut bond, rating firm China Chengxin International downgraded Ziguang Group’s main and debt credit ratings again, from BBB to B, due to uncertainty over the interest payments on its RMB 5 billion corporate bonds due on the 10th and its USD 450 million debt.
The RMB 1.3 billion private placement bond “17紫光PPN005” issued by Ziguang Group in 2017 was materially defaulted on November 16.
After the deep debt crisis, it is rumored that Purple Group lacks capital, talent and other resources to promote its own two major investment projects, and the construction plans of Chengdu NAND factory and Chongqing DRAM factory, which have a total investment of RMB 200 billion (about NTD 880 billion), are both facing suspension.
As the U.S.-China technology war continues to escalate, governments across the mainland have subsidized the construction of semiconductor plants, but the lack of technology and funding has led to a wave of semiconductor failures, which have formed a chain of explosions as mainland officials intervene to rectify the situation. Industry insiders say the Beijing authorities are focusing resources on fewer semiconductor projects with better prospects.
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