(Yicai) April 12 -- Shares of Minmetals Capital sank after the Chinese state-backed investment manager confirmed a default by three trust products it manages worth a combined CNY650 million (USD90 million). 

Minmetals Capital [SHA: 600390], which is part of mining giant China Minmetals, fell by as much as 9.6 percent during trading in Shanghai today before closing 8.3 percent lower at CNY4.29 (59 US cents) a share. 

The Changsha-based firm announced this morning a default by three trust products managed by Minmetals International Trust, a majority-owned subsidiary. The company will negotiate with the issuers and urge them to raise the necessary funds as soon as possible, it said. 

The products were all issued and guaranteed by urban investment companies in Kunming, capital of China’s southwestern Yunnan province, Yicai learned. One, which is worth CNY301 million (USD41.6 million), should have been redeemed by late February. The maturity date of another worth CNY261 million was Jan. 28, and the third, worth CNY85.8 million (USD11.9 million), came due last October.

The products involve eight Kunming-based urban investment firms, all of whose controlling stakes are directly or indirectly held by Kunming’s state-owned assets manager. Urban investment firms are vehicles Chinese local governments use for off-budget bond financing.

According to a recent report by Minsheng Securities, there are 26 bond-issuing platforms in Kunming and their interest-bearing debt totals about CNY450 billion (USD62 billion), most of which is set to mature this year. 

Minmetals International Trust was set up in 2010. As of last June, the firm had CNY718.6 billion (USD99.3 billion) of trust assets under management, according to its website. Last year, its had net profit of CNY1.2 billion (USD166 billion) on revenue of CNY2.9 billion (USD401 million). 

Besides the trust business, Minmetals Capital’s biggest source of income, the company is also in securities, futures, and financial leasing. In the first half of last year, the trust business brought in revenue of CNY1.6 billion, a third of the total.

Editors: Dou Shicong, Tom Litting