Sunac bonds slump after Chinese developer misses US$29.5 million coupon payment
- The note was indicated at 24.460 cents on a dollar on Wednesday versus 38.639 cents a week earlier, according to prices compiled by Bloomberg
- Sunac payment miss ‘not an out-of-nowhere surprise’, analyst says
The company saw its bonds slump on Wednesday after it missed US$29.5 million in interest payment on Monday for a 7.95 per cent bond due on October 11, 2023. It is currently in a 30-day grace period, after which it will be in default.
The note was indicated at 24.460 cents on a dollar on Wednesday versus 38.639 cents a week earlier, according to prices compiled by Bloomberg. A Sunac 6.5 per cent bond due in 2026 was trading at 23.2948 cents on a dollar on Wednesday, compared with 35.3808 cents on April 6.
“Investors were already expecting that Sunac may not be able to make the coupon payment on Monday after its earlier payment extensions, so it’s not an out-of-nowhere surprise,” said Kenny Chung, portfolio manager at Astera Capital. The prices of Chinese developers’ bonds were under pressure to rise further after a recent rebound, he added.
S&P downgrades Sunac’s rating ahead of looming debt repayment deadlines
At least four developers had bond payments due on Wednesday itself. Zhenro Properties had a US$21.75 million bond due and Agile Group was facing a US$14.6 million coupon payment. Redco Development had interest and principal for its US$12 million note come due. Powerlong Real Estate Holdings, meanwhile, paid the coupon and principal for its US$190 million note due on Wednesday nine days early to boost investor confidence.
Among developers facing bond payments later this month, Logan Group is due to pay a US$7.88 million coupon on April 19 for notes due in 2025. Times China is set to pay interest and principal for a US$166.8 million bond a day later.
As of Tuesday, China’s high-yield bonds had fallen for three days, as investor concern re-emerged following a three-week rally in the segment.
Sunac bonds slump as Fitch cuts ratings for a second time on repayment risk
Once viewed as among the healthiest firms in China’s 18.2 trillion yuan (US$2.9 trillion) property market, Sunac successfully extended a 4 billion yuan onshore bond for 18 months as recently as April 1, according to a stock exchange filing.