Bond Market Special Supply丨 Sound Environmental Replacement Bond Re-default Holders of the North Stock Exchange sold 50 million face value asking for 3 million yuan

On August 25, the Beijing Financial Assets Exchange released the news that the first phase of 2020 replacement notes issued by Beijing Sound Environmental Engineering Co., Ltd. in 2020 on the Beijing Stock Exchange, the relevant holders published transfer information on the platform. The transfer is open to investors, and the denomination of the transferred bonds is 50 million yuan, but the reserve price of the transfer is only 3 million yuan.

It is reported that this period of replacement notes is "20 Sound Project EN001", which is also the first replacement bill in China. A replacement note is a product issued by an enterprise in the interbank market in exchange for its designated non-financial corporate debt financing instruments in a non-cash manner. In short, it is the new borrowing in the bond field to repay the old, that is, the old bond cannot be repaid when it is due, and the new issuance is difficult to continue, and the replacement bond is directly issued to replace the original bond.

The $500 million medium-term bill "17 Sound Engineering MTN001" previously issued by Sound Environment should be redeemed on March 6, 2020. However, due to tight liquidity, there is a risk of redemption, and it is at the same time raising funds to repay debts. The company issued a replacement note in the gold exchange, which was specifically used to replace "17 Sound Engineering MTN001" in a non-cash manner.

According to the announcement of The North Gold Institute, Sound Environment launched a replacement offer to all holders of "17 Sound Engineering MTN001" on March 2, 2020, replacing the bonds held by the holders with new "replacement notes" in accordance with 1:1. As a result, among the 14 holders, a total of 11 holders participated in the replacement, with a total replacement amount of 400 million yuan, accounting for 80% of the issuance amount of the replacement target; a total of 2 holders who did not participate in the replacement, and the amount of non-participation in the replacement was 100 million yuan. Holders who did not participate in the replacement, holding "17 Sound Engineering MTN001" directly defaulted.

It is reported that the newly issued replacement notes will be interested from March 6, 2020, and the bonds will be referred to as "20 Sound Engineering EN001", with a bond size of 400 million yuan. The replacement notes were meant to give a buffer space for issuers with highly strained capital chains, but The replacement notes of Sound Environment defaulted again.

On June 12, 2020, Sound Environment announced that the "20 Sound Engineering EN001" replacement bond, as of the end of June 5, 2020, the company failed to transfer the funds in full to the custodian as agreed. According to the Replacement Offer, on June 6, 2020, the Company was due to redeem 20% of the principal amount of the Replacement Bond and the corresponding interest, but due to the Company's capital situation not being effectively improved, liquidity was extremely tight, and the redemption could not be completed.

On June 11, 2020, the credit rating of the company's main body was lowered from B to CC, the debt level of "17 Sound Engineering MTN001" remained C, at the same time, the debt level of "18 Sound Engineering MTN001" was lowered from B to CC, and the main body and "18 Sound Engineering MTN001" continued to be included in the watch list.

At present, the unpaid bonds of Sound Environment are mainly "17 Sound Engineering MTN001", "18 Sound Engineering MTN001" and "20 Sound Engineering EN001".

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