On Friday,
China Minsheng Investment Group announced that its subsidiary, Boom Up Investments, will not make principal or interest payments on August 2 on $500 million of three-year, dollar-denominated bonds.The default will be the first for the firm’s dollar-bond creditors. CMIG, as the former high-flyer investment conglomerate is known, failed to make payments on renminbi-denominated obligations in January.CMIG’s Friday announcement, although not a surprise, is nonetheless significant. As Bloomberg News reported, the firm was once thought to become “China’s answer” to
American giant JPMorgan Chase.The troubles of CMIG mirror problems at other companies and follow the shock failure of Baoshang Bank, which the government took over last month.Bond defaults are rocking China. This year, they will almost certainly top those in 2018, which itself set a record. The failures suggest, among other things, that the Chinese
economy is in severe distress.