China's $1.5T publicly traded corporate-bond market is set to experience its first ever default after Shanghai Chaori Solar Energy Science & Technology said it may not be able to fully meet an 89.8M yuan ($14.6M) interest payment that is due on Friday.
The company instead plans to pay just 4M yuan to bondholders.
Until now, the government has bailed out at-risk companies - including Chaori last year - due to concern about the impact that a default would have, especially on the soaring shadow-banking sector.
The news of the expected default weighed on Chinese stocks, although market strategist Chris Weston said it would be a good thing, as "a normal economy needs defaults to better price bonds and other debt products."
The Shanghai Composite closed -0.9%.