Chaori default yet to hit Chinese rivals


The Chaori Solar default which made headlines around the world on Friday has not, thus far, not seen the apocalyptic share price plunges predicted by some of the more excited pundits at the weekend.

With Bloomberg this morning relaying Chaori Solar vice president Liu Tielong’s plan to pay the CNY 85.8 million (US$ 14 million) left in overdue interest payments to noteholders by selling off solar farms in Greece, Bulgaria, Italy and the U.S., the impact of China’s first onshore default was negative but hardly dramatic on rival solar manufacturers in the People’s Republic.

While Canadian Solar’s Nasdaq-listed shares dipped 3.17% at Friday’s close, analysts put the fall down to disappointment over the company’s figures.

On the NYSE, shares in Yingli Green Energy were down 0.29% at Friday’s close and the value of Trina Solar’s stock actually rose 0.15%.

It could be different story when the U.S. exchanges open this afternoon, depending on how investors react to Liu’s plan, outlined to Bloomberg in a telephone interview.

Solar projects would raise $163 million

The Chaori VP said the portfolio of European and U.S. solar projects to be sold would raise CNY 1 billion, more than enough to placate bondholders wh missed their payment on Friday.

As the world watches for any discernable effect on the Chinese solar manufacturing sector – and wider stock market – of the apparent removal of the public money safety net which has been assumed to apply to publicly listed stock in China for the last 20 years, a Bloomberg analyst said Chaori’s diversification was its downfall.

Beijing-based Wang Xiaoting, of Bloomberg New Energy Finance, said the Shanghai company’s decision to follow rival manufacturers into developing downstream solar projects to consume its panels at a time of global overcapacity stretched the company too far.

It remains to be seen whether the downstream commitment can provide a financial escape route to the cell maker with Liu having reportedly told Bloomberg, Chinese lenders who promised an CNY 800 million credit line in case of cash flow problems associated with the notes in question now ‘have no willingness to lend.’