(Yicai Global) Sept. 28 -- The National Association of Financial Market Institutional Investors (NAFMII) -- the interbank bond market regulator -- has said it will suspend the financing business of debt-ridden Dongbei Special Steel Group Co.
Dongbei Special Steel Group is a major local state-owned iron and steel enterprise. The firm faces operating difficulties as China's economy sputters. Its mounting losses have nonetheless failed to deter the company from leveraging itself via bond issues with the aid of underwriters. The company has defaulted nine times since May on its repayment of bonds issued via the interbank market, with a total of almost USD870 million (CNY5.8 billion) now in default.
To resolve its debt dilemma, Dongbei Special Steel previously proposed a debt-to-equity swap to its creditors, but they were in no mood to play such ping-pong. The government of northeast China's Liaoning province -- where Dongbei Special Steel is based -- stepped into a bondholders' meeting last week to push the company into bankruptcy reorganization. The plan is due out by the end of the month.