They are setting up a pyramid to siphon off the profits. JKS getting well over 8% interest rate on 6 year bonds. This is near Junk bond status. Current Opex runs around $0.10. Interest on the new capacity being bought is near $0.05 per watt. Places Opex and interest at around $0.15. On an ASP of $0.60-$0.70 They need 20-25% gross margins just to break even.
"According to the prospectus disclosure, "13 Jingke debt" for the six-year bonds totaling 800 million yuan, a fixed interest rate, payable annually, a coupon rate of 8.99 percent, the main underwriting by Societe Generale Securities. Peng Yuan Credit comprehensive assessment, the main body of the issuer credit rating of AA-credit rating of AA bonds.
Recent issue bonds of the same level of debt compared to the 13 Jingke debt coupon rate is significantly higher, the difference of more than 200 basis points. Such issue last Wednesday 13 Yu Sanxia debt, Dagong International awarded the AA rating, duration of 6 years, the coupon rate of only 6.40%, 259 basis points lower than the 13 Jingke bonds; issued last Thursday 13 the Qinghe investment debt ", same Peng Yuan Credit awarded an AA rating, a term of seven years, but 6.68% coupon rate.
Moreover, an overwhelming majority of 13 Jingke debt "interest rates, or built on the premise of guaranteed; regardless of the 13 Yu Sanxia debt" or "13 Qinghe investment debt", were not set any warranties."