Sino-Ocean freezes payments on US$4 billion bonds, other offshore debt to pursue restructuring as China’s housing slump persists

Name: Boom, bust and borrow: Has China’s housing market tanked?
Uploaded: 2023-09-15T07:00:27.000Z
Duration: 10 min 57 s
Description: Boom, bust and borrow: Has China’s housing market tanked?

Sino-Ocean is seeking consent from bondholders to delay bond maturity while it freezes all payments on offshore borrowings

China’s ‘three red lines’ policy continues to claim new victims despite recent state efforts to stem the damage

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Residential buildings under construction outside Shanghai in July 2022. Photo: Bloomberg

Cheryl Arcibal

Published: 3:00pm, 15 Sep 2023Updated: 3:02pm, 15 Sep 2023

Chinese property developer Sino-Ocean Group has suspended payments on all its offshore debt, including almost US$4 billion of dollar-denominated bonds, to embark on a “holistic debt management” in yet another sign the nation’s housing market is mired in distress.

The company is seeking consents from bondholders to extend the maturity of three dollar bonds due between 2024 and 2029, while freezing payments on all its offshore borrowings, according to an exchange filing on Friday. Trading in the securities and its stock was halted on the announcement.

Sino-Ocean had 91.9 billion yuan (US$12.7 billion) of borrowings on June 30, according to its latest interim report to shareholders published earlier this week, of which 49 per cent were due within 12 months. Some 43 per cent of the total borrowings were denominated in foreign currencies, it said.

10:57

Boom, bust and borrow: Has China’s housing market tanked?

China’s “three red lines” policy, introduced in August 2020 to curb excessive debt in the industry, has instead triggered a liquidity crunch and US$29 billion of defaults. Since China Evergrande Group stumbled two years ago, new victims have emerged. Country Garden Holdings, once China’s biggest home builder and the industry’s gold standard, this month reached out to creditors to delay its debt obligations.

“The group has experienced a rapid decline in contracted sales and increased uncertainty in asset disposals and has continuously faced limitations in various financing activities,” Beijing-based Sino-Ocean said in the filing. “The optimal path forward is a holistic restructuring” to stabilise its operations, it added.

It hired US investment bank Houlihan Lokey to reorganise its finances and has retained Sidley Austin for legal advice.

Sino-Ocean’s shares closed at HK$0.66 apiece on Thursday, having lost 42 per cent of their market value this year. The developer’s key shareholders are state-controlled insurers China Life Group and Dajia Insurance Group with more than 29 per cent stake each, according to its filing.

11:05

China housing: Can the world’s biggest housing market boom again?

Losses widened to 18.6 billion yuan in the first half of 2023 from 1.1 billion yuan in the same period a year earlier, according to its latest financial report.