Chinese developer Shimao defaults on fiat loan


SHANGHAI / HONG KONG (Reuters) – Chinese developer Shimao Group defaulted on a loan after missing a payment of 645 million yuan ($ 101 million), the lender said in a letter seen by Reuters on Thursday in the last sign of distress in China’s property sector.

China Credit Trust Co said in the letter, confirmed by two sources familiar with the matter, that 755 million yuan of the trust loan had been repaid. However, the absence of the remaining payment meant that the loan was now in default, he added in the letter to investors on the loan.

Shimao and China Credit Trust Co did not respond to requests for comment.

Separately, its smaller rival, Guangzhou R&F Properties, said it did not have sufficient funds to buy back a $ 725 million bond because sales of its assets did not go as planned.

Chinese developers face unprecedented liquidity shortage due to years of regulatory restrictions on borrowing, sparking a spate of overseas defaults, rating downgrades and sales of stocks and bonds developers.

The offshore default last month by China Evergrande Group, the world’s most indebted developer with more than $ 300 billion in liabilities, exacerbated a debt crisis that threatens the world’s second-largest economy.

Shimao had already seen a sharp drop in its shares and debt in December, sparked by concerns over an asset sale and the cancellation of apartment deals.

For R&F, he said on Wednesday in a filing that the funds available to settle his takeover bid for an offshore bond were significantly lower than the $ 300 million he had previously expected, due to continued volatility in the market. real estate sector.

Last month, R&F offered two takeover bid options to holders of 5.75% bonds, while seeking their consent to extend by six months the maturity of the bond due January 13.

The options redeemed the Notes at a 17% discount, or $ 830 for every $ 1,000 in principal; or by redeeming at most half of the warrants in full, both with accrued interest.

R&F said on the record that 71.7% of bondholders bid for the first option and 24.2% for the second – but added that it expected to have “significantly less” than the 300. million dollars previously planned to buy back the bonds.

“The proceeds from certain asset sales contemplated by the group may not materialize on the settlement date,” he said, adding that the settlement date had been postponed two days to around January 12.

In last month’s document, R&F said it would accept tickets offered on a pro rata basis, and that any tickets not accepted for purchase would be returned to bondholders. Holders who deposited would also be deemed to have approved the extension of the term.

As of 09:35 GMT, the bond was trading at 56.5 cents to the dollar, compared to 66.5 overnight, according to data from Duration Finance. R & F’s other international bonds also fell.

Shimao’s bond due July 2022 dipped to 47.625 from 70.6.

Ashore, most of the two developers’ yuan bonds also fell, with the Shimao bond due in September 2022 dropping 11%.

Hong Kong-listed shares of Shimao closed 5.2% lower. R&F shares gained 2.3%.

($ 1 = 6.3753 yuan Chinese renminbi)

(Report by Jason Xue, Steven Bian and Ma Rong in Shanghai, Clare Jim in Hong Kong, edited by Jacqueline Wong and Mark Potter)


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