Bohai Steel Group Co Ltd, a steelmaker based in northeast China, may be unable to make full repayment on 192 billion yuan ($29.61 billion) of debt, the online financial magazine Caixin reported.

The city government of Tianjin, which owns the firm, has set up a committee of creditors to help resolve the problem, Caixin said on Saturday.

Creditors include the Tianjin branch of the Bank of Beijing Co Ltd and 105 other financial institutions, the magazine reported, including several trust companies such as Tianjin Trust, Beifang Trust and Guomin Trust.

Payments due on some of the related trust products may have already been affected, Caixin said. Chinese trust fims, a lynchpin of the nation's non-bank shadow financing system, typically take in funds from retail investors and relend them at relatively high rates.

Calls to Bohai Steel by Reuters went unanswered.

China's steel and coal sectors have been under immense pressure from an extended slowdown in the nation's real estate industry, a major consumer of basic materials and power.

The central government has recently announced plans to close large amounts of excess capacity and lay off up to 6 million workers.

Beijing has earmarked 100 billion yuan to help workers relocate and retrain, but many appear to be shifting into lower wage sectors including farming and cleaning.

 

Source : reuters.com

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