Agile Group, embattled Chinese property developer, redeems US$207 million bond

The property developer redeemed the 6.2 per cent domestic bond upon maturity on October 19, filing says
The payment follows the January rescue of the debt-ridden company through the sale of a joint venture to a state-owned company

China property

Cheryl Arcibal

Published: 11:14am, 20 Oct, 2022

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Agile Group, one of China’s top home sellers, has redeemed a 1.5 billion yuan (US$207 million) bond due this month, according to a late Wednesday filing with the Hong Kong exchange.

The bond was sold by Guangzhou Panyu Agile Realty Development, an indirect wholly owned subsidiary of Agile Group, in October 2020. The total redemption of 1.593 billion yuan included the principal sum and 6.2 per cent annual interest on the securities, according to the filing.

In January, Agile Group decided to sell its 26.7 per cent stake in a Guangzhou property joint venture for 1.84 billion yuan to a unit of China Overseas Land & Investment, a property arm of China State Construction Engineering, which is directly owned by the state-backed Assets Supervision and Administration Commission of the State Council.

Agile Group’s logo adorns barriers set up for the Tour de France China Criterium in Changsha city, in central China’s Hunan province, in September 2017. The company saw its credit rating downgraded by Moody’s in January. Photo: AFP

The sale of the joint venture was thought to have eased the liquidity pressure on Agile, which saw its credit rating downgraded by Moody’s that same month. Agile was reported to have been facing US$1.1 billion in offshore notes due this year.

The credit ratings company based its downgrade on the increased refinancing risk of Agile’s sizeable debt maturities. Agile’s shares rose 1 per cent to HK$1.90 as of 11:10am Thursday in Hong Kong. Over the last five days the stock has gained 5.5 per cent.

Mainland Chinese developers have been under pressure since Beijing in August 2020 introduced the “three red lines” policy, a set of requirements intended to curb risky borrowing. Unable to tap more loans, China Evergrande Group and other developers have defaulted on their bond payments.

State-backed firms come to the rescue of embattled Chinese developers

Last week, Cifi Holdings failed to make a payment on a HK$2.5 billion (US$319 million) convertible bond with an interest rate of 6.95 per cent due in 2025. It was the developer’s first offshore default.

Beijing has been trying to prop up its embattled real estate sector with various measures.

Authorities in Suzhou, in the southern province of Jiangsu, bought some 5,000 new homes in September, according to calculations based on data from property information provider CRIC China. That equates to about half the total number of new flats that were sold in the city that month.

Local Chinese governments snap up new homes to ease pressure on developers

Jinan in northern Shandong province said at the end of August that a local government arm would purchase 3,000 new flats for long-term rental use later.

Meanwhile, Altay prefecture in the northwestern province of Xinjiang has encouraged state-owned enterprises to buy homes in bulk and convert them into subsidised housing, according to a government notice from late September.

The People’s Bank of China also announced in September that cities where new home prices fell from June through August could reduce mortgage rates for first-time buyers.

The central bank said it would lower the interest rate for housing provident fund loans by 0.15 percentage points for first-time homebuyers from October 1, while the Finance Ministry said residents who buy new homes within one year of selling their old one will be refunded personal income tax on the sale.

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