NANJING Yurun Foods Co., a sausage maker, couldn’t make interest and principal payments due Friday on a 1 billion yuan (US$153.39 million) three-year bond because it failed to allocate the funds on schedule.

    The firm, a subsidiary of Hong Kong-listed China Yurun Food, promised to deposit funds for full repayment of the bond as well as outstanding interest to the National Interbank Funding Center, which will then transfer the funds to bondholders today.

    Credit woes are spreading in China as both privately held and State backed firms struggle with record debt repayment this year amid the worst economic slowdown in a quarter century.

    Numerous issuers of high-yield notes are due to make debt payments in May in the US$8 trillion Chinese bond market. At least nine companies have reneged on bond obligations so far this year, already exceeding the total for 2015. Nanjing Yurun already failed to make full payment for 500 million yuan in bonds in March.

    Nanjing Yurun sold the 1 billion yuan in three-year bonds with a coupon of 5.27 percent in 2013. In a statement Friday, it said the default was due to a weakening of its financial position, and after its parent firm’s honorary chairman, Zhu Yicai, was restricted to a designated residence by the People’s Procuratorate in March. Nanjing Yurun posted a loss of 1.58 billion yuan last year. (SD-Agencies)