SHANGHAI (AFP) ― China’s first-ever default on a domestic corporate bond on Friday has sparked legal action by investors owed interest payments from a solar company, their lawyer said.

Shanghai-based Chaori Solar Energy Science & Technology Co. said Tuesday it was unable to make full bond interest payments of 89.8 million yuan ($14.7 million).

Chaori’s board secretary, Liu Telong, confirmed Friday that the company was in default, Dow Jones Newswires reported.

The development is being widely described as China’s first-ever corporate bond default, but analysts say that it could benefit the market in the long term by raising awareness of risk and making investors more selective.

“The default today is already an established fact,” said lawyer Gan Guolong, who represents investors. “We will definitely help recover bond holders‘ interests through relevant legal action.”

Investors had already asked the Higher Court of Guangdong province to order payment from the company, its listing exchange and the lead underwriter for the bond’s initial issue in 2012, he said, but the case was still pending.

Chaori lists both shares and bonds on the Shenzhen exchange in Guangdong. A commentary issued by China’s official Xinhua news agency late Thursday suggested the government could send a signal by allowing the company to default.

“The episode should help reduce the moral hazard caused by the widespread assumption that an almighty government will always bail out underwater investments with taxpayers’ money,” the commentary said.

“That, after all, is the market playing its own decisive role,” it said, using a catchphrase for economic reforms pledged at a key Communist Party meeting last year.

Investors said representatives had also asked the district government in Shanghai, where the firm is located, and the China Securities Regulatory Commission market watchdog to act.