Chinese language property developer Shimao defaults on $1 billion bond

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

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

China’s real estate sector has been hit by a series of defaults on foreign debt obligations, as highlighted by China Evergrande Group (3333.HK)Once the country’s best-selling developer, it’s now the world’s most indebted real estate company.

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

Shimao failed to pay a total of $1.02 billion in principal and interest to creditors of the 4.75% premium bond, the developer said in a filing Sunday on the Hong Kong Stock Exchange. Kong, citing “market uncertainties for refinancing” and “operating challenges and funding conditions”.

It added that it also did not make principal payments under some of its other foreign debts, without giving details.

The developer has not received notice of the repayment acceleration from its lenders, they said, indicating that fixers have not yet taken action to take enforcement action.

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

Meanwhile, the creditors of two syndicated loans have agreed to give the cash-strapped Chinese developer some steam.

Shimao said it received written notice of the majority’s support for the two syndicated loans agreed in 2018 and 2019, in which HSBC acted as facilitator. main support for dual currency loans.

The creditors, who “generally support the company’s continued exploration of potential agreements and restructuring with relevant stakeholders”, are willing to allow Shimao to continue operating. business with minimal disruption, according to the filing. .

According to Duration Finance, Shimao’s bonds traded at 12.141 cents against the dollar on Friday.

Shimao extended domestic debt obligations and disposed of assets to raise funds, while contract sales in the first five months fell 72 percent from a year ago.

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

Our standards: Thomson Reuters Trust Principles.

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