Red Ponzi Defaults

Like Red Ponzi issues? Like cliff diving? Catching falling knives?

As WSJ reported in their story, it’s been a lot of “unwelcome surprises” for those who believe Red Ponzi financial statements (too funny – there are such people).

Sort of like those who believe there is no voter fraud.

Yongcheng Coal & Electricity Holding Group Co. defaulted last Tuesday by failing to repay a maturing short-term bond worth 1 billion yuan, or the equivalent of $151 million.

That’s a “state-owned” coal mining company a triple-A credit rating by China Chengxin International Credit Rating, a major rating agency in China. Then again, in the Red Ponzi these top grades are far more common.

Then there wasHuachen Automotive Group Holdings Co. failed to repay another 1-billion-yuan bond. Huachen Automotive is the parent company of Brilliance China Automotive Holdings Ltd. , BMW AG’s joint-venture partner in China. Its last financial report showed cash holdings equivalent to $7.6 billion.

Time and money certainly “flies.”

As for the “good news/bad news” joke in all these things,

Fitch says the number of defaults by China’s state-run firms is expected to rise marginally next year as the central bank has shifted toward a more neutral policy stance amid an economic recovery.

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