China Huarong said in a filing that it is making efforts to build a mechanism wherein increased internal control and compliance is in tune with the regulator CBIRC’s requirement for better compliance management among financial institutions in China. Whilst not giving more detail, Huarong said it will conduct a review of more risky projects soon. Separately, Bloomberg reports that bond circulars doing the rounds last week showed that Huarong may release its 2020 results by end-August to avoid a default or step-up for its perpetual bonds, assuming the trustee or bondholders quickly request the financials after a 180-day waiting period that ends in August. This comes after Huarong said its auditors need more time and therefore it may even miss its August publishing deadline. S&P analysts last month mentioned in a note, “If Huarong International fails to deliver the results by the deadline stipulated in the bond terms, it will be in technical default”, and not constitute an event of default under the terms and conditions of their bonds.
Huarong’s dollar bonds were trading lower – its 4.75% 2027s and 1.625% 2022s were down 1.5 and 1.6 points to 64 and 72.5.