A Chinese mining company, whose flamboyant boss made headlines for spending $11m on his daughter’s wedding, has defaulted on a $50m trust loan, underlining the stresses in China’s vast shadow banking system.
The investment product, which was backed by loans to coal miner Liansheng Resources, failed to repay investors last Friday, according to state media reports. It had raised Rmb289m ($47.7m) from wealthy clients of China Construction Bank.
Although this tranche – the fourth of six – is now technically in default, investors may yet see some of their money returned under a restructuring of the company. Liansheng has previously failed to repay investors on earlier tranches of maturing trust loans, having borrowed a total of Rmb1bn.
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