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China's first corporate default sparks legal action by investors

Published on Mar 7, 2014 6:06 PM

SHANGHAI (AFP) - China's first-ever default on a domestic corporate bond on Friday has sparked legal action by investors owed interest payments from a solar company, their lawyer said.

Shanghai-based Chaori Solar Energy Science & Technology Co. said on Tuesday it was unable to make full bond interest payments of 89.8 million yuan (S$18.5 million).

Chaori's board secretary, Mr Liu Telong, confirmed on Friday that the company was in default, Dow Jones Newswires reported.

The development is being widely described as China's first ever corporate bond default, but analysts say that it could benefit the market in the long term by raising awareness of risk and making investors more selective.

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