Chinese developer Yuzhou Group Holdings warned of certain bond default events, citing the liquidity crisis affecting the company and the wider real estate industry. The Hong Kong-listed company said in an exchange filing on Monday that it will not pay the principal and interest on untendered dollar bonds due on Tuesday, and did not make the payment on another bond tranche due on Sunday. The total principal amount due on the notes was close to US$105 million, it said. “Having carefully considered its liquidity position in light of the deteriorating real property market and tightening of the onshore supervision of financing activities and cash balances,” the company opted not to pay back the untendered amount of bonds, Yuzhou said in the filing. Yuzhou said it will relaunch an exchange offer for the untendered notes and maintain active communication with bondholders. Chinese developers have resorted to various methods, including exchange offers and asset sales to revert defaults and pay back mounting liabilities. Investors are closely tracking the impact of recent easing policies to see how soon the measures will take effect and help individual companies, which is key to restoring confidence in the sector. On Thursday, China lowered its five-year loan prime rate, a reference rate for mortgages, for the first time since April 2020. A day earlier, Reuters reported that China plans to relax restrictions as soon as the end of this month to allow developers to access funds from sales still held in escrow accounts to help ease their cash crunch problems. Shanghai-based DaFa Properties Group also did not make such payment on part of its US$184.5 million notes due on January 18. The company had proposed an exchange offer and said it was completed on the same date. Other developers that have engaged creditors with similar debt swaps include Shenzhen-listed Risesun Real Estate Development, and Hong Kong-listed Shinsun Holdings and Kaisa Group Holdings. China’s indebted developers get a break from rate cuts and easing “Home builders are trying to delay their debt payments via exchange offers as they continue to face relatively huge liquidity pressure,” said Zhang Bo, chief analyst at 58 Anjuke Real Estate Research Institute, adding that it has become easier for developers to seek financing due to the recently relaxed policies. Although he expects the debt exchange offers in the dollar bond market to gradually drop as the financing environment improves amid support from Beijing, such deals will persist in the year’s first half. Shenzhen-based Yuzhou had turned to creditors for the debt swap of two notes of US$582 million in mid-January, citing short-term liquidity pressure. Yuzhou was also seeking approval from creditors to weaken the covenants on a dozen other offshore debt totalling US$4.92 billion. Coupon payments totalling US$110 million on five other notes due within the next seven weeks are likely to be delayed, the company said. Yuzhou’s shares climbed 1.4 per cent in Hong Kong on Monday. Peers China Evergrande Group gained 3.9 cent while Longfor Group rose 1.1 per cent. The Hang Seng Properties Index, however, closed 0.07 per cent lower after rising by as much as nearly 1 per cent intraday. Yuzhou’s US$120 million bond due September 22 was indicated at 29.301 cents to the dollar on Monday, according to Bloomberg data.