(Yicai Global) Dec. 9 -- A number of state-owned enterprises in China’s Henan province have had difficulties selling bonds in the wake of the CNY3 billion (USD459 million) debt default by Yongcheng Coal and Electricity Holding Group, leading to problems in their capital chains.

A document from Henan Nengxin Heat and Electricity to Henan Nengxin Thermal Power circulated on social media today. It said that coal stocks have fallen to 10,000 tons and the company’s fundraising has been hampered by Yongcheng Coal’s default. The lack of funds to buy coal could lead to operating problems, it said.

Members of staff at Henan Nengxin Thermal Power confirmed the authenticity of the document to Yicai Global, adding that Henan Nengxin Heat and Electricity is the supplier of its steam and heat sources. Senior executives are trying to find a solution, they added.

Henan Nengxin Thermal Power is responsible for providing heating for the city of Xuchang in the central Chinese province, so the problems could affect supply to millions of homes.

Yongcheng Coal issued a statement on Nov. 10 saying that it could not meet maturing bond payments. Its default has shaken faith in other SOEs including China Pingmei Shenma Group, the main shareholder in Nengxin Heat and Electricity.

No Henan-based SOE has succeeded in issuing bonds since then, and China Pingmei Shenma Group is facing increasing capital-related pressure. Its short-term debt accounted for 75.8 percent of its total liabilities as of the end of March, which indicates substantial pressure on liquidity, China Chengxin Credit Rating Group said in a recent ratings report.

Xuchang’s municipal government has already taken measures several times to help with funding for Nengxin Heat as heating provision is vital in winter, Yicai Global also learned.

Editor: Tom Litting