China real estate developer Yango Group asked holders of its asset-backed securities for a one-year payment extension as it warned it may struggle to pay on time, financial researcher Redd reported.
Yango’s 1.27 billion yuan ($198 million) 6.5% asset-backed securities mature in November 2022 but give holders the option to demand repayment next month. Redd cited four unnamed sources as saying the company had made the request to investors on Friday, at a closed-door meeting in Shanghai attended by senior executives.
The development comes as the China Evergrande debt crisis raises concerns among global investors about the heavily indebted, $5 trillion China real estate market, tightening funding options for other developers.
Evergrande Escape
Evergrande narrowly avoided a default for the second time in a week on Friday, making a last-minute payment on an overdue dollar bond coupon just before its grace period expired.
Yango has no plans to provide credit enhancements to encourage holders to approve the extension, and executives indicated the company “could have trouble paying” if investors declined to extend the put date, the report said. No bondholders had approved the plan by the end of the meeting, Redd reported.
In addition to its asset-backed securities, Yango has eight outstanding U.S. dollar bonds worth a total $2.24 billion and 14 outstanding yuan-denominated bonds worth 13.1 billion yuan, according to Refinitiv data.
• Reuters with additional editing by Kevin Hamlin
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