Chinese state-owned oil giant China National Offshore Oil Corp. will pay a dollar bond a week after its initial maturity date following public holidays in the nation, sending some creditors searching for the rules on what would constitute a default.
(Bloomberg) — Chinese state-owned oil giant China National Offshore Oil Corp. will pay a dollar bond a week after its initial maturity date following public holidays in the nation, sending some creditors searching for the rules on what would constitute a default.
The note, issued with a face value of $1.3 billion note in 2013 by the company’s Australia-incorporated entity Cnooc Curtis Funding No. 1 Pty, had a due date of Oct. 3. But some holders were told by their clearing houses that Cnooc plans to pay it on Oct. 10, according to people familiar with the matter, who asked not to be identified as the matter is private.
While no reason was given for the delay, the Oct. 3 maturity fell within a Sept. 29 – Oct. 6 national holiday period in mainland China. The price was last indicated at 99.99 cents, showing that there was little concern about the investment-grade group’s ability to pay.
Still, the development sparked debate among some creditors over what would constitute an event of default given the complications with the holiday calendar. It prompted them to scour the offering memorandum used when the note was issued a decade ago.
That document lays out a number of scenarios for what could constitute an event of default, including failure to pay principal within two business days after the due date.
It goes on to define a business day as a day in Australia, the city of New York, Hong Kong, mainland China “and the applicable place of payment other than a Saturday, Sunday or a day on which banking institutions are authorized or obligated by law or executive order to remain closed.”
Cnooc didn’t reply to a request for comment amid the public holidays in China.
(Corrects story published Oct. 6 to correct name of entity in the first paragraph.)
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