Shandong Ruyi Techonology Group unexpectedly repaid bondholders on the maturity of its $345 million dollar bonds that came due on December 19. This comes against a backdrop of investor concerns over rising corporate bond defaults in China.
The Chinese fashion and textile conglomerate had invested in businesses such as Swiss fashion house Bally, French luxury-goods group SMCP SA, Britain’s Aquascutum and The Lycra Co., borrowing heavily for many of these acquisitions such that creditors had become concerned about the group’s financial health. Its dollar bonds had tumbled to a record low of 47 cents a week before maturity as Moody’s Investors Service cut Shandong Ruyi’s credit rating to Caa1 from B3 and the markets speculated on the company’s ability to repay bondholders. Moody’s commented that it was increasingly worried about the group’s ability to meet coming onshore and offshore liabilities. S&P Global Ratings had also downgraded the company to CCC+ with negative outlook, and subsequently withdrew Shandong Ruyi’s rating at the textile group’s request on December 5.