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China Developer Zhenro Defaults on Two Offshore Bonds

Shares in the country’s 30th-largest developer slid 10% in Monday morning trade while its bond prices also tumbled


Some offshore bondholders are scouting for bargains in China's cash-squeezed property sector after a slew of funding support measures followed a brutal slide.
A growing list of Chinese developers have entered into or are preparing to kick-off debt restructuring talks with offshore bondholders after defaulting on payments. File photo: Reuters.

 

China’s Zhenro Properties said it has missed interest payments on two offshore bonds and expects four more defaults in the coming months due to the lockdown in Shanghai, but added that it plans to make the payments by the end of May.

Shares in the country’s 30th-largest developer slid 10% in Monday morning trade while its bond prices also tumbled.

“During the past few weeks due to the Covid lockdown situation in Shanghai, some of the company’s operations have been halted and the progress of sales and asset disposals have been delayed,” it said in a filing on Sunday.

It was not able to pay $20.4 million in combined interest for its May 2020 and June 2021 notes within the 30-day grace period after they were due on March 10.

The two notes together are worth $540 million.

Zhenro also flagged that it might miss interest payments on its September 2020, June 2020 and January 2020 notes that have grace periods ending respectively on April 10, April 14 and May 14. It might also default on the $23.4 million principal of April 2021 notes due April 13, it said.

Those four bonds combined are worth more than $860 million.

The January 2020 bond due April 2024 was trading at 13.006 cents on the dollar compared to 15.443 cents on Friday.

Zhenro plans to extend maturity of its onshore and offshore debt and dispose of assets worth up to 4 billion yuan ($630 million) in the first half, sources told Reuters in February.

 

  • Reuters with additional editing by Sean OMeara

 


 

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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