Chinese property developer Shimao misses $1 billion bond repayment

Chinese property developer Shimao misses $1 billion bond repayment
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HONG KONG, July 3 (Reuters) – Chinese property developer Shimao Group (0813.HK) In the latest blow to China’s struggling property market, it missed interest and principal payments on a $1 billion offshore bond due on Sunday.

The default was the first public offshore payment issued for the Shanghai-based developer. With $6.1 billion in international bonds, Shimao is the sixth-largest issuer among Chinese developers, according to Refinitiv.

China’s property sector has been hit by a series of defaults on offshore debt obligations, highlighted by China Evergrande Group. (3333.HK)once the country’s best-selling developer, but now the world’s most debt-free property company.

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Three of the first five issuers – Evergrande, Kaisa Group (1638.HK) and Sunac China (1918.HK) – have already defaulted on dollar bonds.

Shimao defaulted on a total of $1.02 billion in principal and interest to lenders on its 4.75% senior notes, the developer said in a Hong Kong stock exchange on Sunday citing “market uncertainties related to debt refinancing” and “operational and funding uncertainties”. “certainties,” he said. conditions”.

It also defaulted on some other offshore debt principal payments, it added, without disclosing details.

The developer said it had not received notice from lenders about the acceleration of payment and said the debtors were not going to take enforcement action.

Shimao hired Admiralty Harbor Capital as financial advisor and Sidley Austin as legal advisor to assess and explore ways to manage the liquidity crisis.

Meanwhile, lenders to its two syndicated loans have agreed to give the cash-strapped Chinese developer a breather.

Shimao said it had received written notices of support from most of the lenders of the two syndicated loans agreed in 2018 and 2019, in which HSBC acted as the lead broker for the dual-currency loans.

The lenders, which “continue to explore the possibility of an agreement and potential restructuring with the relevant stakeholders of the company,” were willing to allow Shimao to continue running the business with minimal disruption, according to the filing. .

The Shimao bond traded at 12.141 cents to the dollar on Friday, according to Duration Finance.

Shimao extended its onshore debt obligations and sold assets to raise funds, while contracted sales fell 72% in the first five months from a year earlier.

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Reporting by Selena Lee and Clare Jim; Edited by Louise Heavens and Edmund Blair

Our standards: Thomson Reuters Trust Principles.

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