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China Developers Want Maturity Extensions For Offshore Debts

Chinese developers tell regulators at the NDRC and SAFE they want to extend the maturity on their offshore bonds or undertake a debt restructuring


Men work at a high-rise construction site in Beijing, on October 18, 2021. Photo: Thomas Peter, Reuters.

 

Some Chinese property developers have voiced an intention to regulators to extend the maturity on their offshore bonds or undertake a debt restructuring, two sources with knowledge of the matter said, as a growing number of defaults hits the sector.

The developers proposed the ideas at a meeting held jointly by the National Development and Reform Commission (NDRC) and the State Administration for Foreign Exchange (SAFE) on Tuesday, the sources said.

It was not immediately clear which developers raised those proposals, and what decision the regulators would settle on.

But regulators told developers facing large offshore debt maturity to evaluate their repayment risks and report difficulties, the sources said, declining to be named due to sensitivity of the matter.

The development underlines the frenetic behind-the-scenes efforts by debt-laden developers and regulators to contain the fallout centred around embattled China Evergrande Group, as worries over the liquidity crisis in the property sector mount.

“Developers were asked to report in great details about all their offshore bond repayment plans; they need to voice out if there are particular payments [for which] they’re seeing some difficulties in repayment,” one of the sources said.

The NDRC said in a statement late on Tuesday that regulators have asked the unnamed companies in the meeting to optimise their foreign debt structures and proactively prepare for repayment of both principal and interest on their foreign bonds.

They told the foreign debt issuers to use funds for approved purposes and “jointly maintain their own reputations and the overall order of the market.”

Details of the meeting, including proposals from the eight developers who attended the meeting, have not been disclosed.

 

Three Defaults This Month

The meeting with regulators took place in Beijing on Tuesday against a backdrop of Fantasia Holdings Group, Sinic Holdings and Modern Land all defaulting on maturing dollar bonds this month.

The liquidity crisis in China’s $5 trillion property sector has been, in part, fuelled by Evergrande, which is teetering on the brink of collapse with more than $300 billion in debt and struggling to meet payment obligations.

SAFE and NDRC did not respond to a request for comment.

A total of eight developers including Kaisa Group, Shimao and Sino-Ocean Group attended the meeting on Tuesday, financial media outlet Caixin reported on Wednesday.

China Vanke, Central China Real Estate and Oceanwide Holdings were also among the attendees, the two sources, who have direct knowledge of the discussions, said.

Vanke declined to comment. Kaisa confirmed its participation in the meeting, without further elaboration. Central China, Oceanwide, Shimao and Sino-Ocean Group did not respond to requests for comment.

 

• Reuters with additional editing by Jim Pollard

 

SEE ALSO:

China Evergrande Pledges to Finish At Least 31 Projects

Modern Land Becomes Latest Chinese Developer to Default

 

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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