Tianwei defaults: no can not break the myth

Polaris solar PV net news: on April 21, the group released important matters that, due to the large losses, fails to honour 2011 second stage medium-term notes of interest this year. Tianwei group has become the first in the public bond market interest on the breach SOEs.

Previously, the Group had released two servicing risk warning notice in April. Bulletin, the companies huge losses is one reason new energy industry contraction, excess capacity, lower product prices and other conditions failed to improve, company revenue cost upside down is serious, operating loss, mainly from the new energy industry; reason is based on the principle of caution in the scope of consolidated financial statements related assets provision for impairment of 8.34 billion dollars.

According to debt credit figures, from 2011, the Group net profit has 4 losses in a row, and losses continue to enlarge. Since 2014, other than creditors, the creditors such as banks and trust companies have taken measures, such as debt recovery of tianwei group. Which reflects the banks ‘ solvency of tianwei group has produced a very pessimistic attitude.

Tianwei group has also announced in mid-April, some funds should be deposited in the bank accounts of unsuspecting case Bank deduction to offset the Baoding branch of tianwei group in parts of the bank debt. Insiders say this may be the last straw weighing down tianwei group.

Tianwei group bond default, a public opinion the most common point of view mainly has following several aspects:

First, that breach exposed the weakness of the Chinese PV industry. Securities research report pointed out that the people’s livelihood, tianwei group interim breach exposed the excess capacity of the photovoltaic industry to producers of small, weak financial strength caused by combat.

Tianwei group market deteriorating business conditions known, but of those super tianwei days and Hunan, Hubei, bonds of different, tianwei of just 88.5 million dollars for breach and tianwei trimming when backers, so most investors confidence on tianwei bond has just confirmed. But there is another, market participants believe that, for the Group’s default crisis, tianwei’s parent company did nothing. Because subsequent debt tianwei honour hole is too large, soldiers loaded group does not want to pay too high a cost to save, but also because the PV industry has gradually lost the living space, tianwei group as soldiers loaded and children.

But there are also some analysts believe that with the gradual implementation of the new national reform, the new energy industry boom is expected to continue to rise. Analyst Deng Haiqing said new energy bonds are not without opportunities.

Is considered the second breach as the first State-owned enterprise bond default, indicating that differentiation of credit increase.

CICC evaluation concluded that the tianwei events of default in the short run, low-rated bonds will come under pressure in favour of the high grade, widen spreads among the ratings will be phased; the medium to long term, breaking just per dollar and lower financing costs are not contradictory, but conducive to the efficient allocation of resources.

BOCOM international Managing Director and Chief Strategist Hong Hao thought, tianwei default is conducive to effective allocation of resources and market price risk, but because of its State-owned enterprise backgrounds, the bond market had no strong default expectations.

Haitong securities suggests that defaults from private to public, and to the spread of State-owned enterprises by private enterprises will continue to only pay attention to preventing credit risks, carefully selected to avoid stepping on mines.

The third is that defaults will break the bonds of “rigid payment” industry knowledge, that breach is breaking the rigid payment a positive development. Investors have said that this means that there have been new breakthroughs in China’s financial market, and is now maturing.

Some netizens expressed, tianwei votes as a State Enterprise bonds in default on its substance, exceeded market expectations, the public bond market to break the “rigid payment” yet another milestone. SOE just confirmed fairy break, private enterprises will further demonstrate the quality of good risk management.

Deng Haiqing, an analyst believes that defaults of iconic significance, led by liquidity, China’s pricing mechanism for credit spreads are expected to change, the credit debt markets increasingly tends to normalize. This will accelerate the 2.0 era of credit pricing, low grade credit spreads will be phased impacts, high level and low level of spreads on the stage is enlarged.

Some financial commentators said, to resolve rigid payment you can actually breach for breach of trust product. In this way, market on rigid payment expected breaks down trust products, trust product risk premiums will rise; the entire debt instruments, “risk-free rate of return” would fall, stock market valuations improved.

But there are also netizens pointed out that the SOE just confirmed is broken, this suggests the economy has taken a serious to a certain degree. Due to an economic downturn in the second quarter, large amount of maturity, low refinance qualified enterprises are still facing difficulties, annual reports and track the ratings focus on disclosures, credit incident probability is high, the real increase in defaults would cause for breach of normal and expected increase in marketing, expansion of the necessity of its existence spreads among the rating.

Original title: tianwei defaults: no can not break the myth

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