12/6/2023 0 Comments Chinese property developer default![]() The parent company says that it “is not able to fund the outstanding amount due until it has completed the sale or refinancing of” certain assets. 'Ghost towns': Evergrande crisis shines a light on China's millions of empty homesĬhina Properties Group said this month that its development subsidiary, Cheergain Group, had defaulted on $226 million worth of payments. This aerial photo taken on Septemshows the halted under-construction Evergrande Cultural Tourism City, a mixed-used residential-retail-entertainment development, in Taicang, Suzhou city, in China's eastern Jiangsu province. Shares in the company, which has a market value of 3.2 billion Hong Kong dollars ($420 million), are down nearly 60% this year. Ratings agencies S&P and Moody’s slapped “default” credit ratings on Fantasia and said the non-payment of principal would likely also put the company in default on its remaining bonds. ![]() The Shenzhen-based company failed to pay $315 million owed to lenders earlier this month, comprising a $206 million bond repayment and a 700 million yuan ($109 million) loan from the property management unit of Country Garden, China’s second largest developer.įantasia said that it would probably “default on external debts,” according to Country Garden. Luxury apartment developer Fantasia Holdings is teetering on the brink. It also has a key deadline coming up this week: A 30-day grace period for a $47.5 million interest payment on another offshore bond expires on Friday.Įvergrande’s stock is down some 80% this year, and its market value has collapsed to just 39 billion Hong Kong dollars ($5 billion). Its efforts to sell off some of its businesses for cash haven’t been going well - just last week, Evergrande said it had called off an agreement to sell a controlling stake in its property management unit to a rival Chinese developer, Hopson, for some $2.6 billion. ![]() That would be a challenge, since the subsidiary responsible for that part of the business has yet to deliver a single car.Įvergrande is also not done with its debt woes. Last week, Xu said that the company wants to make electric vehicles its main business within a decade. The firm’s Chairman Xu Jiayin has even talked about taking Evergrande in a new direction. The property giant has also resumed work on more than 10 housing projects in southern Guangdong province, which will be delivered to homebuyers “one after another.” Last week, the company made a $83.5 million interest payment on a dollar-denominated bond that allows it to stay out of default, at least for now, according to Chinese state media. This month, the company has demonstrated some attempts to get back on solid footing. Gilles Sabrie/Bloomberg/Getty ImagesĮvergrande wants to build electric cars, not homes The China Evergrande Group logo displayed atop the company's headquarters in Shenzhen, China, on Thursday, Sept. At the end of September, Evergrande raised $1.5 billion in cash by selling part of its stake in a Chinese bank. With total liabilities of some $300 billion, including $20 billion in international bonds, Evergrande is China’s most indebted real estate company. The crisis started last month with Evergrande’s warning, which sparked fears about which banks and investors across the world might be exposed to its debt mountain. The final - and worst - option would be a disorderly series of defaults, which would send shock waves across China’s economy, and perhaps beyond.įive developers have already run into trouble as China’s once red-hot real estate industry cools rapidly. They could also seek bailouts from the Chinese government.Įarlier this month, the People’s Bank of China said that Evergrande had mismanaged its business, but risks to the financial system were “controllable.” And at financial forum in Beijing last week, Chinese Vice Premier Liu He stressed that risks were generally under control, despite what he called “individual problems” in the property market. ![]() The companies could try to restructure their debts and work things out with their lenders. It’s unclear how the crisis will be resolved. Since then, more developers have made similar public confessions, unnerving investors and raising fears of contagion across the vast sector. China’s real estate crisis isn’t showing any sign of letting up.Įmbattled conglomerate Evergrande rattled global markets in September by warning it could default on its huge debts.
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