Real estate company misses payment on $1 billion bond

BEIJING: Chinese property developer Shimao Group failed to make payment on a $1 billion bond that matured on Sunday, one of the biggest such defaults in the property sector so far this year. struggling East Asian country.

The sector has been struggling since authorities began a crackdown on excessive indebtedness and rampant consumer speculation in 2020, with giants such as Evergrande and Sunac scrambling to make payments and renegotiate with creditors.

The crisis has raised fears that the industry’s struggles could spread to the wider economy, and the latest jolt came on Sunday when Shimao said he had failed to pay principal and interest on a $1 billion offshore banknote.

In a filing on the Hong Kong Stock Exchange, where it is listed, Shimao said it had experienced a noticeable decline in contract sales due to “significant changes in the macro environment of China’s real estate industry since the second half of 2021 and the impact of Covid-19.”

The company added that it tried to negotiate refinancing and waivers, but was unable to make some payments due to “difficult” market conditions.

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He said he had not received notice from creditors for accelerated repayment and that lenders had indicated they would not take action to enforce it now.

Shimao develops residential, hotel, office and commercial properties in China, with projects in major cities such as Beijing and Shanghai.

According to Bloomberg News, it was the 14th largest Chinese developer by contracted sales last year.

Chinese property developers struggled as home buyers tightened their purse strings due to an uncertain economic outlook.

“The contagion has spread from Evergrande to Sunac, and now to Shimao,” Bloomberg Intelligence analyst Kristy Hung said. “It makes us fear that the scale of the debt crisis is beyond the imagination of any market watcher.”

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Elaine R. Knight