On March 7, 2014, Shanghai Chaori Solar Energy Science
& Technology Co. (‘‘Chaori Solar’’), a Chinese
solar-equipment manufacturing company, failed to meet
interest payments (the ‘‘Chaori Solar Default’’) of
RMB89.8 million (U.S.$14.5 million) on a RMB1 billion11
(U.S.$161.9 million) five-year bond it issued in
2011 (the ‘‘Chaori Solar Bond’’).12 This is China’s first
onshore bond default,13 and the first default on a publicly
traded debt in Mainland China since the PRC government
regulations began in 1999.14
Perhaps to the surprise of Chaori Solar and many others,
there has been no bailout by the PRC government,
an event that has been seen as a landmark for market
discipline in Mainland China.15 As of March 18, 2014,
the Chaori Solar Bond was suspended on the Shenzhen
Stock Exchange