(Yicai Global) Jan. 28 -- A county-level government in southwestern China's Guizhou province has unexpectedly failed to repay a bond with a principal of CNY255 million (USD39.4 million), marking this year's first municipal bond default in China.

Zunyi Bozhou District State-Owned Assets Investment and Management Group has not yet come up with a repayment plan after the bond matured on Jan. 10, Yicai Global learned from investors.

The debtor's Chairman Zhang Yuyong could not be reached via phone calls. The bond issuer, owned by Bozhou district's financial bureau, has been providing funds for many local infrastructure projects.

China had CNY10.65 trillion (USD1.64 trillion) in outstanding municipal bonds by Dec. 31, 2020. Only four such notes have defaulted in history, one for each year between 2017 and last year. All of them were repaid in less than two weeks after the first missed deadline, public data show.

Bozhou is a high-ranking economic hub in Zunyi city and Zunyi is Guizhou province’s second-largest city with tourist attractions so it is hard to understand why the bond defaulted, an investor of that specific product told Yicai Global.

The area has been growing economically. Bozhou district reported CNY35.4 billion (USD5.5 billion) in gross domestic product last year, up 5.5 percent from a year earlier. Meanwhile, its fiscal revenue fell by 3.4 percent to CNY3.9 billion (USD601.7 million). In 2021, the district's target is about 9 percent GDP growth and a 5 percent fiscal revenue increase.

The product’s underwriter CITIC Trust is communicating with the firm and the related administrative departments to protect investors’ rights and interests, it said to Yicai Global.

The three-year bond is guaranteed by Zunyi Bozhou District Urban Construction Investment Business Group and Zunyi Goujiang Investment and Construction, Yicai Global learned.

Editor: Tang Shihua, Emmi Laine