Cloud Live bond default tests market credulity

China's second public corporate bond default hasn't spooked investors. Instead, some appear willing to bet on a White Knight riding in again to save the day.
After seeing an earlier bond default averted, investors have come to see light at the end of every potential bond default in China
After seeing an earlier bond default averted, investors have come to see light at the end of every potential bond default in China

The market's reaction so far to Cloud Live Technology Group’s missed bond repayment shows onshore credit market needs a real default to break investors’s belief in the Chinese state's implicit guarantees.

Cloud Live said in a statement on Tuesday it was short Rmb241 million $39 million needed to repay a Rmb402 million bond issued three years ago.

The company, a Shenzhen-listed restaurant chain with plans to shift focus to information technology, has the distinction of being the onshore debt market’s second default on a public corporate bond after Shanghai Chaori Solar missed an interest payment of Rmb89.8 million on its bond in March last year.

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