Chinese developer misses US$1bn bond payment

Shimao mentioned it has experienced a decrease in contracted gross sales because of to modifications in the sector, introducing that lenders would not acquire enforcement action however


Chinese developer Shimao Team Holdings Ltd (世茂集團) explained it has unsuccessful to make payment on a US$1 billion bond that matured on Sunday, a person of the greatest this kind of defaults so considerably this year in the country’s troubled assets sector.&#13

China’s authentic-estate sector has been battling given that authorities commenced a crackdown on extreme credit card debt and rampant customer speculation in 2020, with giants this kind of as China Evergrande Group (恆大集團) and Sunac China Holdings Ltd (融創中國) scrambling to make payments and renegotiate with collectors.&#13

Picture: Reuters

The crisis has sparked fears that the industry’s struggles could unfold to the broader economic climate, and the hottest jolt arrived on Sunday when Shimao mentioned it had not compensated the principal and curiosity on a US$1 billion offshore take note.&#13

In a filing to the Hong Kong Stock Trade, exactly where it is mentioned, Shimao explained it has knowledgeable a obvious drop in contracted profits due to “significant changes to the macro ecosystem of the residence sector in China considering the fact that the second half of 2021 and the influence of COVID-19.”&#13

The organization included that it had attempted to negotiate refinancing and waivers, but was not able to make some payments for the reason that of “challenging” market situations.&#13

It mentioned it has not obtained observe from collectors for accelerated repayment and that loan providers have indicated they would not acquire enforcement action at this place.&#13

Shimao develops residential, lodge, office environment and business properties in China, with initiatives in main towns this kind of as Beijing and Shanghai.&#13

It was China’s 14th-largest developer by contracted income past calendar year, in accordance to Bloomberg News.&#13

China’s builders have been struggling as homebuyers tightened their purse strings owing to an uncertain financial outlook.&#13

Just one organization in the jap metropolis of Nanjing explained it would accept truckloads of watermelons as down payment from neighborhood farmers, Chinese media noted.&#13

“The contagion has unfold from Evergrande to Sunac and now Shimao,” Bloomberg Intelligence analyst Kristy Hung claimed. “That raises our concerns that the extent of the debt crisis is outside of any current market watcher’s creativeness.”

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