Jiangsu Luling Runfa Chemical Co, an unlisted chemical fertiliser company, said it may not be able to pay principal and interest due on a collective 100 million yuan ($15.7 million) note maturing on Dec. 4.
It said in a statement posted on the website of one of China’s main bond clearinghouses that it was unable to do so amid severe business and liquidity difficulties.
The company was contractually obligated to deposit funds for the 53.1 million yuan payment on Nov. 20, 10 business days before principal and interest on the bond were due, but had so far failed to do so, the company said.
If the firm is unable to make repayment, the bond guarantor Jiangsu Re-Guarantee would be responsible for doing so, the statement said.
Chinese bond defaults have been accelerating this year as the construction, heavy industry and mining sectors remain under severe pressure from weak demand and falling factory gate prices.
Following the latest default by China Shanshui Cement Group Ltd in early November, more than 40 companies have delayed or cancelled more than 40 billion yuan of bond issuance.
Chinese AA-rated corporate debt yields are up around 20 basis points since the start of November, in part reflecting rising concerns on creditworthiness in the heavy industrial sector.