Two more China property developers fail to meet bond repayment obligations, seek advice on resolving defaults

Two more Chinese developers have failed to meet dollar-bond payments, occurring amid renewed home-sales softness and a lack of aggressive stimulus.

Central China Real Estate said it did not pay interest on a note before the end of a grace period on Friday and that it would suspend payments on all offshore debt. Smaller peer Leading Holdings Group disclosed in its own exchange filing Friday night that it hadn’t paid the entire US$119.4 million (HK$935 million) of principal plus interest due on a dollar bond issued a year ago as part of a debt swap.

Both firms also said they will engage with external advisers and work on holistic solutions for their offshore debt. Central China is the country’s 33rd-largest builder by contracted sales, according to China Real Estate Information.

The delinquencies followed several Chinese builders last week remitting funds for interest payments at the end of 30-day grace periods or soon afterward. The property sector’s unprecedented cash crunch resulted in record defaults on Chinese issuers’ dollar bonds last year and still-elevated missed payments so far in 2023.

Expectations have been growing that Chinese officials will unveil more stimulus for struggling sectors including real estate. But investors were left disappointed last week after Chinese banks cut their mortgage reference rate by less than some anticipated. A slow stimulus roll-out is adding to concerns about the country’s economy.