Subsidiaries of a Chinese state-owned firm have missed millions of US dollars' worth of payments on their letters of credit (L/Cs).

The failure of the Jiangsu SOHO Holdings Group Co to meet its obligations builds on concerns about the ability of Chinese companies to service their debts.

Textile trade

Jiangsu SOHO's 132 subsidiaries operate in several sectors, including investment and finance, real estate and international trade.

But it is Jiangsu Textile Industry Import & Export and its affiliates that have run up US$32.3 million of overdue payments on their L/Cs according to a statement issued by Jiangsu SOHO.

No guarantee

It said the textile subsidiary's lack of funds is due to payment problems from one of its customers.

Jiangsu SOHO provided no guarantee for its textile subsidiary's L/Cs so the parent company remains shielded from the missed payments.

Fifteen lenders, including Bank of Communications and China Everbright Bank, are involved according to the statement, which did not specify the banks exposed to the missed L/C payments.

Similar problems

Jiangsu SOHO's problems follow those that emerged earlier this year with Kaisa Group Holdings, which became the first Chinese developer to miss a coupon payment on international debt.

Kaisa is now looking to restructure after missing a US$23 million interest payment on its US$500 million of bonds.

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