CHINA Credit Trust Co. delayed payments on a 1.3 billion yuan (US$210 million) high-yield trust product backed by coal mining assets after the borrower failed to raise funds to repay investors.

    The Beijing-based company extended the maturity of Credit Equals Gold No. 2, which was scheduled to expire Friday, according to a statement distributed to investors in the product. China Credit Trust aims to sell assets held by the product within 15 months to repay investors, the Thursday statement showed.

    The product is at least the second of China Credit Trust’s to face difficulties this year and highlights rising default risk in China’s US$1.9 trillion trust industry. Credit Equals Gold No. 1, created to raise 3 billion yuan for a coal miner, was bailed out days before maturity in January, averting what would have been the nation’s first trust default in at least a decade.

    The Credit Equals Gold No. 2 product “is a very unique problem,” said Du Changchun from Northeast Securities Co. “Under normal circumstances, it’s unlikely that the government will take the initiative to let it default. The probability is low.”

    Chinese financial markets Friday were unfazed by the news as stocks rose, while currency and money markets were little changed.

    China Credit Trust confirmed the payment delay in a statement Friday. Credit Equals Gold No. 2 paid investors a total of 264 million yuan in three annual interest payments since 2011, with annualized return rates of 10.5 percent, 10.8 percent and 5.17 percent respectively, the trust firm said in the statement.

    China Credit Trust created Credit Equals Gold No. 2 in July 2011 to raise funds for mining projects for Shanxi New North Group Co., a coal company based in the northern Chinese province of Shanxi.

    The trust company will urge the coal company to resume production and restructure its assets, and is also actively looking for buyers of the trust assets. (SD-Agencies)