© Reuters. FILE PHOTO: An commercial of property developer Sunac China Holdings is seen at a residential complicated in Shanghai, China March 25, 2018. REUTERS/Stringer
By Scott Murdoch and Clare Jim
HONG KONG (Reuters) -Developer Sunac China missed the deadline for coupon funds on a $742 million offshore bond and mentioned on Thursday it does not count on to make funds coming due on different bonds, including to a wave of defaults in China’s debt-laden property sector.
A supply near the corporate, the nation’s third-largest property developer by gross sales, mentioned Sunac is contemplating a restructuring of its offshore debt to increase funds. It’s also speaking to state-owned entities about strategic investments within the agency.
Sunac declined to remark.
The corporate mentioned in a submitting to the Hong Kong inventory change that it has employed Houlihan Lokey (NYSE:) as a monetary advisor and Sidley Austin as a authorized adviser to discover options to ease present liquidity constraints.
With $7.7 billion in greenback bonds, Sunac is the fourth-largest issuer amongst Chinese language builders, based on knowledge from Period Finance.
China’s property sector has been hit by collection of defaults on offshore debt obligations, highlighted by China Evergrande Group and Kaisa Group, in addition to bond exchanges, with Zhongliang Holdings the newest agency to increase funds.
Sunac’s debt fee drawback displays a better probability that another main builders may miss their upcoming obligations or might must do bond exchanges, analysts and builders mentioned.
The debt disaster has spilled over into the nation’s huge property market, with new house gross sales and building slumping as financing will get harder and potential house patrons draw back, fearing some tasks could also be stalled.
“The group’s contracted gross sales have continued to say no considerably, whereas entry to new financing has develop into more and more tough with extra liquidity points occurring amongst sure property builders,” Sunac mentioned within the submitting.
In a separate press assertion, Sunac mentioned its aggregated gross sales in March and April fell 65% from a yr in the past attributable to COVID-19 outbreaks in varied cities, and its refinancing and asset disposal plans didn’t materialize after a collection of ranking downgrades earlier this yr.
The agency confirmed it missed the Wednesday deadline for a $29.5 million curiosity fee on the October 2023 bond that was required to be repaid final month, and it doesn’t count on it can pay three different coupons due final month totalling $75.3 million earlier than the 30-day grace durations expire, or pay different senior notes once they develop into due.
Sunac mentioned lacking the October 2023 fee meant bondholders may search the rapid compensation of the principal and curiosity nevertheless it had not acquired any “acceleration notices” from these holders.
It apologised to its collectors within the submitting and requested them to offer it the time “to beat challenges” whereas it makes efforts to boost credit score profile, together with accelerating gross sales, disposing of belongings, searching for debt extension, and introducing strategic traders.
The October 2023 bond was traded at 21.156 cents on the greenback as of 0301 GMT, edging up from 19.107 on Wednesday, whereas one other bond due June 2022 traded at 28.015.
Sunac’s Hong Kong-listed shares have been suspended since April 1 pending the discharge of its 2021 monetary statements. Its unit Sunac Companies fell over 7% on Thursday.
