Top chipmaker joins China's list of high-profile bond defaulters

Tsinghua Unigroup's bonds have tumbled since late October.
Tsinghua Unigroup's bonds have tumbled since late October.PHOTO: AFP

BEIJING (BLOOMBERG) - A top Chinese chipmaker failed to repay a 1.3 billion yuan (S$265.6 million) privately issued bond, becoming the nation's newest high-profile debt defaulter.

Tsinghua Unigroup said it wasn't able to repay on time the 5.6 per cent, onshore bond due on Monday (Nov 16), which constitutes an actual default, according to a company statement seen by Bloomberg News. It said the payment failure was due to tight liquidity.

The announcement came after the chipmaker failed to win immediate approval from creditors to delay full repayment on the note, after a vote on the proposal was declared invalid, according to a separate document seen by Bloomberg.

Backed by the prestigious Tsinghua University, the company said it will keep raising funds to repay investors the bond's principal and interest.

A company official in charge of matters related to the bond couldn't immediately comment on the issue.

Tsinghua Unigroup's bonds have tumbled since late October when its decision not to buy back a privately issued 6.5 per cent, 1 billion yuan perpetual bond triggered concerns about its repayment abilities.

Worries about the chipmaker's finances and fate have persisted since two years ago, when Beijing ordered education providers to distance themselves from commercial operations.

The company has been struggling to avoid a similar fate that befell its archrival which became China's biggest onshore bond defaulter earlier this year. Peking University Founder Group, whose business spans from financial services to commodities trading, has been under court-led debt restructuring since February.