The Chinese coastal city of Tianjin plans to issue corporate bonds to ease the debt burden of a local state-owned steelmaker — in a flagship case of restructuring in the domestic industry.
Tianjin’s city government has finalised a plan to restructure the Rmb192bn ($28.6bn) debt of Bohai Steel Group by placing its most profitable assets into a new company and converting a portion of the liabilities into bonds, according to Caixin, a respected financial magazine.
The deal involving Bohai and its 105 creditors comes as local governments across China struggle to restructure state-owned companies that creditors believe have implicit state guarantees.
The bloated Chinese steel industry has become a battleground for state enterprise reform, as a slowdown in growth piles pressure on companies that have long subsisted on government handouts and preferential loans.