A DOMESTIC power transformer maker yesterday said it is uncertain it can pay bond interest due next week after China’s onshore debt market this month had its second default ever.

    Baoding Tianwei Group Co. is unsure if it can make the 85.5 million yuan (US$13.8 million) payment April 21 because of “huge losses” last year in its alternative energy business, Shanghai-listed affiliate Baoding Tianwei Baobian Electric Co. said in a statement.

    Shenzhen-listed China Cloud Live Technology Group Co. missed a bond payment April 7 after Premier Li Keqiang said last month that he is prepared to tolerate individual cases of “financial risk.”

    China’s corporate debt is the biggest in the world, a former central bank adviser wrote in China Daily, as data released yesterday showed economic expansion at its weakest since 2009 last quarter.

    “As the economy slows and the government’s tolerance for defaults rises, Chinese companies’ default risks may increase,” said Liu Dongliang, a senior analyst at China Merchants Bank Co. in Shanghai. “But we can’t exclude the possibility that these troubled companies may get bailouts at the last minute.”

    China’s corporate borrowings are the highest in the world in absolute terms and relative to gross domestic product, former People’s Bank of China adviser Yu Yongding wrote in an April 15 commentary in China Daily.

    China’s gross domestic product rose 7 percent in the three months through March from a year earlier, the National Bureau of Statistics said yesterday.

    The yield on Baoding Tianwei’s BB-rated notes due April 2016 has risen 3.69 percentage points this year to 18.98 percent, ChinaBond data show. The company sold 1.5 billion yuan in the securities in 2011. (SD-Agencies)