DONGBEI Special Steel Group Co., an unlisted steelmaker whose first debt default helped spark a bond market sell-off in April, said it was unable to make payment on another bond.

    It announced the default on a 870 million yuan (US$130 million) two-year private placement note, which matured Monday, on the website of China’s interbank market operator Tuesday.

    The problems at Dongbei Special Steel, which has defaulted on at least seven debt instruments this year, have caused headaches for one of its primary debt underwriters, China Development Bank, and the provincial government of Liaoning that owns the firm.

    Investors holding around 2.2 billion yuan in the notes accused the provincial government of Liaoning and the local State-owned Assets Supervision and Administration Commission of dereliction in their duty in dealing with Dongbei Special Steel’s defaults.

    Financial magazine Caixin and other domestic media reported that Dongbei Special Steel bondholders asked China Development Bank to include in the most recent bondholder resolution a line that regulators temporarily bar Liaoning Province-owned enterprises from issuing debt and prevent financing by the provincial government.

    China Development Bank later issued a statement saying some media reports were inaccurate. But it added that as an underwriter its role was to pass on feedback to regulators rather than make concrete proposals. The bank also said that it would continue to support the economic development of Liaoning and other northeastern provinces. (SD-Agencies)