A Chinese technology firm said Tuesday it cannot meet a 241 million yuan ($39 million) debt repayment, making it the first company to default on corporate bond principal in modern China.

Cloud Live Tech Group said in a statement to the Shenzhen stock exchange it was unable to pay principal and interest on a five-year, 480 million yuan bond issue sold in 2012. Investors had an option to be repaid their principal after three years.

Solar company Chaori last year became China's first-ever to default on a domestic corporate bond after it was unable to make full interest payments of 89.8 million yuan.

Chinese Premier Li Keqiang last month signalled that Beijing was willing to accept some debt defaults, saying individual cases are "hardly avoidable" under economic restructuring.

Analysts say such defaults could benefit the market in the long term by raising awareness of risk and making investors more selective.

But in the past authorities have stepped in to ensure that most debtholders in failing firms are paid off, and investors poured into Cloud Live shares on Tuesday, with the stock surging its 10 percent daily limit to 8.40 yuan as reports said it could be taken over and restructured.

"The company might have some behind-the-scenes actions or measures, plus the market environment is hot," Central China Securities strategist Zhang Gang told AFP, referring to a recent stock rally.

The official Xinhua news agency called the Cloud Live default a "precedent-setting" case.

Beijing-based Cloud Live was previously a restaurant chain serving up cuisine from the provinces of Hunan, Guangxi and Guangdong before switching to big data services last year, media reports said.

"Poor core business has led to continuous sharp losses," Cloud Live said in the statement, adding it was "faced with numerous lawsuits and an investigation by the China Securities Regulatory Commission".

China's securities market watchdog is investigating the company for share price manipulation.

A construction firm, Huatong Road & Bridge Group, narrowly missed becoming China's second corporate bond default last year after paying off its debt using accounts receivable from companies linked to local governments.