Chinese developer Agile’s interest-payment default on US$483 million bond sends shares tumbling
- Developer’s shares fell 12.9 per cent after saying it ‘will not be able to fulfil all payment obligations under its offshore debts’ because of liquidity pressure
- Agile is struggling along with the overall sector, with presales declining 68 per cent year on year to US$905 million from January to April
Agile Group Holdings slumped after the mainland Chinese developer failed to pay interest on an offshore bond, underscoring the sector’s continuing struggle with liquidity pressure despite Beijing’s supportive measures.
The stock fell 12.9 per cent to HK$0.61 on Tuesday, its steepest decline in a week.
The Guangzhou-based developer acknowledged it was unable to service the coupon on a US$483 million bond maturing in 2025 within the grace period that ended on Monday. The company “will not be able to fulfil all payment obligations under its offshore debts” in light of the liquidity pressure, according to a filing to the Hong Kong stock exchange on Tuesday morning.
“The group has been making relentless efforts to minimise the impact [of the liquidity pressure] on its business operations and fulfil its debt payment obligations to the greatest extent,” Agile said, adding that it will engage external financial and legal advisers to find solutions to its debt problems.
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Agile has been struggling along with the country’s overall sector as home sales remain sluggish. In the first four months of the year, the company’s aggregate presales had declined 68 per cent year on year to 6.55 billion yuan (US$905 million).
Chinese developers are struggling with their debt problems even after Beijing launched supportive measures to inject liquidity into distressed home builders earlier this year, while several big cities like Hangzhou and Xian have removed home purchase curbs.
Agile previously said on its WeChat account in February that many of its projects in Chongqing, Guangzhou and Kunming had been included in local governments’ “whitelists”. It delivered more than 72,000 homes in 120 projects across 60 cities last year, it added.
Last week, Country Garden Holdings, one of the largest developers in China by sales, serviced interest worth 65.95 million yuan on two onshore bonds totalling 17 billion yuan due on May 9, after missing the initial repayment date. The cash-strapped developer had initially alarmed the market when it said that it would not be able to meet the payment deadline because of lower-than-expected sales.
Chairwoman Yang Huiyan on Monday called on the company’s employees to get through these difficult times, saying that the company would get over the crisis with the help of the government’s latest supportive measures, citing the experience of US property giant Lennar that recovered from a 10-year crisis, according to a press release on the Guangdong-based company’s WeChat account.
Meanwhile, the transacted home sales of China’s top 100 developers extended a decline in April, dropping 44.9 per cent year on year and 12.9 per cent month on month to 312 billion yuan, according to research firm China Real Estate Information Corporation.
Moody’s Ratings estimated national new home sales will decline by up to 15 per cent this year because of weaker economic prospects and concerns over on-time project completion and delivery.
“Government support will help to stimulate some demand, though we do not expect a notable rebound in contracted sales in the near term,” the rating company said in a note on Tuesday.
