Pigs hang from an overhead conveyor at a Smithfield Foods Inc. pork processing facility in Milan, Missouri, U.S. (Photographer: Daniel Acker/Bloomberg)

These Chinese Bondholders Are Being Paid in Ham Instead of Cash

(Bloomberg) -- A Chinese company has come up with an innovative way to placate creditors - as long as they like ham.

Chuying Agro-Pastoral Group Co. said holders of 271 million yuan ($39 million) of its debt have agreed to take ham or pork gift packages instead of interest payments, according to a filing on the Shenzhen Stock Exchange on Thursday. The Zhengzhou-based pork producer failed to repay 500 million yuan of local bonds due this week amid a cash crunch caused by the spread of African swine fever.

“Payment in kind becomes PIH (Pay In Ham)," said Owen Gallimore, head of credit strategy from Australia & New Zealand Banking Group.

For Judy Kwok-Cheung, director of fixed income research at Bank of Singapore, these cases illustrate the liquidity concerns facing small and medium enterprises in China. “Payment in kind is generally not seen as acceptable for debt repayment," she said.

Still, at least it’s luxurious ham. A gift package from Chuying Agro-Pastoral costs 8,999 yuan ($1,298) on the e-commerce website of JD.Com.

©2018 Bloomberg L.P.