Bloomberg Quotes Naomi Moore on China Bond Defaults
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Akin Gump financial restructuring partner Naomi Moore has been quoted in the Bloomberg News article “China’s Offshore Creditors Are Watching for New Kind of Default.” The article reports on what has been a record year for Chinese bond defaults and the possible first-ever delinquency on an offshore security sold directly by a Chinese company.
The bond issuer in question, as the article notes, is Huachen Energy Co., which failed last week to make a coupon payment on its $500 million bond due in 2020 governed by New York law. The company says, however, that it will make good on the payment within the allowed grace period, but any default could eventually lead to the question of how much recourse offshore creditors have to Huachen’s domestic assets.
In theory, Moore said, holding bonds sold by a China-incorporated company should be preferable, as creditors will effectively be closer to the business’s onshore assets. But, she added, “you are weighing that up against the unprecedented nature of this and the uncertainties involved.”