The number of Chinese companies “consistently overdue” on commercial paper payments jumped 26% in December from a month earlier as a liquidity crunch hitting Chinese property developers reduced their ability to service debt.
A total of 484 companies were overdue on at least three commercial paper payments from August 1 to December 31 last year, according to Shanghai Commercial Paper Exchange (SHCPE).
The December total was 100 more companies than in November and included 95 in the real estate sector, including Shimao Group Holdings, Kaisa Group Holdings and Greenland Group, it said.
Four of the names are linked to Shimao, which is discussing payment arrangements with creditors after announcing a default on a trust loan last week.
The list, which does not disclose financial figures, also includes real estate firms controlled by Kaisa Group, which is also struggling to repay investors, according to an analysis of the firms by Reuters.
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Companies controlled by Risesun Real Estate Development, China Grand Enterprises, Zoina Group and Seedland are also on the list.
China’s commercial paper market came under renewed scrutiny in 2021, with regulators demanding greater disclosure as part of efforts to rein in ballooning debt in the property sector.
Commercial paper, which is not counted as interest-bearing debt, is commonly used in the property sector as a payable that promises suppliers future payment on a fixed date paid usually within one year.
But it increasingly became a source of funding for developers locked out of other financing channels.
The SHCPE, established in 2016, is a unified national bill trading platform approved by the People’s Bank of China.
In a related development, developer China Merchants Shekou Industrial Zone Holdings plans to issue 2.58 billion yuan ($405.43 million) of debt to fund acquisitions.
The disclosure, made by China’s interbank market operator, comes as Beijing encourages state-owned developers to acquire assets from cash-strapped real estate firms to ease liquidity pressures.
The Shenzhen-listed company’s shares fell 2.3% in Wednesday trading to 14.02 yuan.
- Reuters with additional editing by George Russell
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