Chinese developer Sinic warns of default on US$250 million bond due next week

Name: Unpaid by Evergrande, supplier sells car and home to rescue his business
Uploaded: 2021-10-12T07:35:27.000Z
Duration: 2 min 25 s
Description: Unpaid by Evergrande, supplier sells car and home to rescue his business

Sinic Holdings has US$694 million in dollar bonds outstanding and has already missed domestic payments last month

Borrowing costs for dollar junk-rated debt, which is dominated by Chinese developers, soars to highest level in about a decade with yields at 17.5 per cent

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A worker prepares to weld a steel structure at a construction site in Beijing. Chinese property firms are scrambling to avoid outright default on their upcoming debt obligations. Photo: AFP

Bloomberg

Published: 3:35pm, 12 Oct 2021Updated: 3:41pm, 12 Oct 2021

Sinic Holdings Group has become the latest Chinese developer to warn of imminent default, as rising contagion risk leaves investors guessing on who else may face a credit crunch.

The Shanghai-based developer said in a Hong Kong stock exchange filing it does not expect to repay a US$250 million dollar bond due on October 18 and that may trigger cross-default on its two other notes. The firm has US$694 million in dollar bonds outstanding, according to Bloomberg-compiled data. The firm missed domestic payments in September, sparking an 87 per cent stock plunge.

Sinic’s woes are another sign of the hidden risks for investors in China’s beleaguered property debt market as uncertainty over the future of Asia’s biggest issuer of junk bonds, China Evergrande Group, weighs on the sector. A sell-off has accelerated since a surprise default by Fantasia Holdings Group last week, sparking concerns about its distressed peers.

Borrowing costs for Chinese dollar junk-rated debt, which is dominated by property firms, have soared to their highest in about a decade with yields at 17.5 per cent, according to a Bloomberg index. That has prompted refinancing risks for the sector as access to a key source of funding dries up, threatening a wave of defaults if there are no signs of authorities easing their clampdown on the sector.

02:25

Unpaid by Evergrande, supplier sells car and home to rescue his business

In the meantime, property firms are scrambling to avoid outright default on their upcoming obligations. Modern Land (China), a Beijing-headquartered developer with US$1.35 billion of dollar bonds outstanding, is asking holders for a three-month extension to pay off a note due on October 25.

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