Tokyo, June 29: Japanese investors, who have yet to receive interest payments on a Samurai bond from China's debt-ridden Hainan International Trust and Investment Corporation (HITIC), said on Thursday that they were worried about the firm's health. The incident has marred China's triumphant return to the Japanese Samurai market this week and raises old fears about the strength of its financial institutions, bankers said. The market for Chinese corporate bonds is still labouring under the shadow of the Guangdong International Trust and Investment Corp (GITIC), which filed for bankruptcy in January 1999 with some $4.7 billion in debt.Investors and officials of companies involved in the deal said the situation at HITIC could be more serious than the technical problem cited by the Chinese trust firm as its reason for missing the payment on Monday.
"It's a technical problem," said a HITIC official on Wednesday. "The grace period is 14 days."
Investors are now watching to see whether HITIC can meet that July 10 interest payment deadline. The bond will be considered default if the firm fails to make the payment by the deadline. "Interest payments by HITIC had not been paid by this afternoon," said one market source close to the deal. "From what I'm hearing, HITIC's problem appears to be more serious than a simple technical problem."
An official of a Japanese firm who had contacted HITIC said he failed to obtain a clear response about HITIC's payment plans.
"If the problem was a technical problem, as HITIC says, why do investors have to wait for four days?" the official said. "They didn't have a clear explanation. "It seems that the local and central governments are now handling the problem. HITIC told us they are consulting with these governments," the official said. China's vice minister of finance, Jin Liqun, was quoted by Japan's Nihon Keizai Shimbun newspaper on Wednesday as saying the central and local governments would ensure payment soon.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.