TROUBLED construction firm Huatong Road & Bridge Group Co. managed to avoid a landmark bond default at the last minute yesterday, according to one of its underwriters.

    Huatong, based in northern China’s Shanxi Province, raised enough funds to pay off both principal and interest on a 400 million yuan (US$64.51 million) bond due by the end of yesterday, according to an official at China Guangfa Bank, one of the underwriters.

    The company warned last week that it might fail to make the payments, renewing concerns about rising default risks in China’s bond market.

    Reuters quoted sources directly involved in the issue as saying yesterday that aggressive fundraising by Huatong, combined with money contributed from local government bodies in Shanxi, managed to allow Huatong to dodge what would have been the first-ever public default in China’s interbank bond market, and the first time a firm defaulted on a bond principal in the country.

    Reports of the looming default have further dinged sentiment in China’s already sensitive market for lower-rated private bond issuers.

    Huatong previously said its chairman, Wang Guorui, was assisting an official investigation and hadn’t returned to his position.

    The firm didn’t provide details of the investigation, but the Chinese People’s Political Consultative Conference Shanxi Committee said July 10 that Wang had been stripped of his membership over a suspected violation of law. (SD-Agencies)