If you were a buyer of STP equity and you wanted to hold the shrs for longer than a quick trade, it seems like the logical thing would be to buy the debt(bonds) that are currently trading at half of par even though they are due to mature in 3 months. You would be higher on the corporate structure in case there is a credit event. I dont think they will be bailed out by the chinese gov nor will be able to pay off the debt. Its my opinion that the company will wipe out the existing equity holders and issue new equity to pay the bondholders.
the bonds are currently trading for half of par, so the equity should be near worthless. The debt which is higher on the capital structure is at such a steep discount and the equity has doubled over the last few months. WHAT A DISCONNECT!!!