Rise of Chinese Semiconductors, Liquidity Crisis... Tsinghua Unigroup Fails to Extend Corporate Bond Maturity

220 Billion KRW Corporate Bond Maturity Extension Denied, Main Cause: Cost Increase Due to Excessive Investment
Other Chinese State-Owned Enterprises Like Hwacheon Automobile Also Facing Liquidity Crisis

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Chinese Tsinghua Unigroup (Tsinghua Holdings Group) has failed to extend the maturity of corporate bonds worth 220 billion won, facing the risk of default, according to Chinese economic media Caixin.

According to Caixin on the 18th, Tsinghua Unigroup was unable to repay corporate bonds worth 1.3 billion yuan (about 220 billion won) that matured on the 16th. Tsinghua Unigroup requested the bondholders for a maturity extension before the due date, but it was not accepted.

Accordingly, Chinese credit rating agency China Chengxin downgraded Tsinghua Unigroup's credit rating from 'AA' to 'BBB'. China Chengxin stated, "Liquidity pressure is increasing, and there is a high possibility of default on other bonds issued by Tsinghua Unigroup."

Bondholders including Shanghai Bank discussed the maturity extension, but some bondholders did not agree to the extension, citing a lack of grounds to believe the situation would improve in six months.

Tsinghua Unigroup is a semiconductor company with 51% of its shares held by Tsinghua Holdings, established by Tsinghua University. The remaining 49% is owned by a company controlled by Zhao Weiguo, chairman of Tsinghua Unigroup. Its affiliates include mobile chip designer Unisoc (Ziguang Zhanrui) and NAND flash memory manufacturer Yangtze Memory Technologies Co. (YMTC).

As Tsinghua Unigroup faces a liquidity crisis, there are analyses that China's semiconductor self-reliance strategy may also suffer setbacks.

As of the end of September, Tsinghua Unigroup's debt stood at 52.8 billion yuan (9 trillion won), of which 60% is short-term debt due within one year. Immediately, debts worth 1.3 billion yuan and 450 million dollars will mature by the end of this year. Debts maturing by the end of June next year amount to 5.1 billion yuan and 1 billion dollars.

Tsinghua Unigroup's liquidity crisis is reportedly due to financial risks such as increased interest expenses from aggressive investments. Additionally, there is analysis that the crisis was triggered by failure to secure competitiveness in high value-added semiconductor sectors.

Other large Chinese state-owned enterprises besides Tsinghua Unigroup are also facing liquidity crises. Brilliance Auto Group Holdings, which operates the German BMW and Chinese joint venture (BMW Brilliance), announced on the 17th that it failed to repay bonds worth 6.5 billion yuan. Brilliance's parent company is Huachen Automotive, owned by the Liaoning provincial government. Huachen Automotive declared default on 1 billion yuan worth of 3-year bonds on the 23rd of last month. Henan coal mining company Yongcheng Coal & Electricity also failed to repay bonds worth 1 billion yuan on the 10th.

This content was produced with the assistance of AI translation services.