Investors brand Greenland’s bond payment extension unfair as credibility of state-backed companies comes into question

Name: New Evergrande protests amid reports troubled Chinese property giant ordered to raze development
Uploaded: 2022-06-07T10:31:21.000Z
Duration: 1 min 29 s
Description: New Evergrande protests amid reports troubled Chinese property giant ordered to raze development

Greenland’s proposal to delay repayment of a US$488 million bond by a year is hurting investor sentiment

The developer’s proposed bond extension is forcing the market to re-examine state-owned companies that were once deemed safe bets

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Chinese developer Greenland Holdings’ plan to delay repayment of a US$488 million dollar bond. Photo: Captured from Weibo

Iris Ouyang

Published: 6:31pm, 7 Jun 2022Updated: 6:34pm, 7 Jun 2022

Chinese developer Greenland Holdings’ plan to delay repayment of a US$488 million dollar bond has been branded unfair by investors and raised concerns over the credibility of state-owned enterprises in the offshore bond market, the South China Morning Post has learned.

The Shanghai government-backed property company has sought to extend the bond, which has a coupon of 6.75 per cent, by a year after the city’s recent lockdown damaged its business. Payment had been due on June 25.

Two bondholders told the Post they are concerned because the extension means the bond would be payed later than other dollar bonds due later this year. One of them is considering legal action if the concerns are not addressed.

Their plight highlights the ongoing debt crisis of highly leveraged Chinese developers, as the ripple effect extends to government-backed names that investors once placed their faith in. The market is re-examining state-backed companies that were deemed safe bets, and this could have a longer-term impact on investor confidence in Chinese issuers.

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New Evergrande protests amid reports troubled Chinese property giant ordered to raze development

Dhiraj Bajaj, a holder of the June 25 bond and head of Asia credit at Lombard Odier, said: “This significantly hurts the Shanghai Sasac (State-owned Assets Supervision and Administration Commission) involvement in any companies going forward and weakens the credibility of the other companies backed by municipal governments which are not as strong as Shanghai.”