Greenland Holdings, a state-backed Chinese property developer, extended the maturity of $488 million in bonds, prompting a ratings downgrade.
Ratings agency S&P Global downgraded Greenland to “selective default” on Wednesday. “We view the transaction as a distressed debt restructuring and tantamount to a default,” the ratings agency said in a statement.
Greenland faces a significant amount of offshore debt maturities over the next 12 months, totalling about $2.4 billion.
The group would have lacked the resources and funding options to fully repay the notes upon maturity had they not been extended, S&P Global said.
Among private developers, many players have already offered bond exchanges to ease their liquidity pressures while a few, including China Evergrande Group and Sunac have defaulted on some payments.
Greenland Holdings last week secured bondholders’ approval to extend the maturity of its 6.75% notes with an outstanding of $488 million by one year to June 25, 2023.
In a filing last month, the company said the group’s business operations, financial performance and short-term liquidity have been adversely affected by Covid-19 outbreaks across the country as well as the pandemic control measures.
Wu Zhengkui, general manager of Greenland’s finance department, told investors that the firm was “fully capable” of repaying on time three other bond tranches due later this year.
He said the June payment was affected by cashflow disruptions due to lockdowns since March, according to a memo seen by Reuters.
- Reuters, with additional editing by George Russell