Strains Emerge in China’s $111 Billion Convertible Bond Market

A distressed Chinese chemical maker is likely to miss payment on its convertible bond, highlighting the growing stress in the country’s $111 billion equity-linked debt market.

Hongda Xingye Co., a polyvinyl chloride producer, announced it may not be able to fully repay its 3% convertible yuan bond if investors demand early redemption this month, according to a statement Monday. Failure to make good on the note with 337 million yuan ($46 million) principal outstanding could constitute a default as there’s no grace period in its offering circular.

This follows the first ever convertible bond default in China’s onshore debt ...