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China Developer Greenland Seen Deferring $488m Bond Debt

Greenland Holdings could become the first state-backed construction giant in China to defer a large offshore bond debt in coming weeks


S&P Global downgraded Greenland Holdings last week but ranked it a notch higher to 'CCC' this week.
The Greenland Group sign is seen on its building in Beijing. A string of Chinese property developers have defaulted on their offshore debt obligations and have had their ratings slashed in the last year as a result of an unprecedented liquidity squeeze and slowing sales. File photo: Reuters.

 

Greenland Holdings could become the first state-backed construction giant in China to defer a large offshore bond debt in coming weeks.

The Shanghai-based developer, which has high-profile projects around the world, said on Friday it plans to defer repayment of a $488 million offshore bond maturing in June by one year, according to sources who attended an investor call.

Many private developers have offered bond exchanges to ease their liquidity pressures, while several like China Evergrande and Sunac China have defaulted on payments.

But Greenland, which has been in dire financial straits since late last year, would be the first state-backed developer to extend a dollar bond payment since the property sector plunged into a major crisis last year.

Greenland issued a filing early on Friday saying it will seek the approval from holders of the June notes to extend the repayment, citing the impact from the Covid-19 lockdown in Shanghai. But the group did not provide any details in the filing.

 

ALSO SEE: China Property Slump May Worsen Amid Covid Curbs: Analysts

 

Plan For Asset Sales

In the investor call, Greenland said it would pay 10% of the principal amount and all the interest on June 25, 2022, the maturity date, while the remaining amount would be paid one year later in 2023.

Meanwhile, the developer said it was “fully capable” of repaying three other bond tranches due later this year on time, as the June payment was only affected by cashflow disruptions due to lockdowns since March.

Greenland could not be immediately reached for comment.

The company’s sales in April dropped 57% from a year earlier and sales this month would continue to see a big fall, Wu Zhengkui, general manager of Greenland’s finance department told the call.

He said the firm plans to sell 50-70 billion yuan ($7.5-$10.4 billion) of assets including office towers and hotels within three years to improve its liquidity.

 

• Reuters with additional editing by Jim Pollard

 

 

 

ALSO on AF:

Greenland a Harbinger of Bailouts in China’s Property Sector

Third of China’s Top Developers Could Default in 2022: Goldman

China New Home Prices Fall for First Time This Year

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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