Chinese developer Sino-Ocean seeks 12-month reprieve to repay US$280 million bond amid liquidity squeeze, maturity wall
- Developer says sales and cash collection remain weak as industry struggles with shrinking demand, waning confidence among homebuyers
- Stock surged 15 per cent in Hong Kong as market rallied, after Beijing turned more dovish than expected on policy easing signals
The state-backed developer offered to repay a 2 billion yuan bond (US$280 million) due on August 2 in instalments spread over 12 months, at the same 4 per cent annual coupon, it said in a Hong Kong stock exchange filing on Tuesday. The firm also sought to insert a 15-day grace period on each of the future repayment dates.
Through the bond trustee, a group of creditors holding more than 10 per cent of the yuan bond has demanded that Sino-Ocean Group honour its obligation on August 2, according to the filing, setting up a potential clash that could deepen its debt default.
10:57
Boom, bust and borrow: Has China’s housing market tanked?
The Beijing-based developer, whose shareholders include state-owned Dajia Life Insurance and China Life Insurance, will convene a meeting of creditors from July 27 to 29 to discuss its repayment proposal, the filing showed.
“Since the second quarter of 2023, affected by industry performance and the pace of the launch of its own property projects, sales and cash collection remained weak,” Sino-Ocean said in the filing. “The group’s available funds on its books continued to decrease” and asset disposals remained uncertain, it added.
The plea highlights China’s housing market crisis stoked by Beijing’s “three red lines” policy unveiled in August 2020 to rein in excessive debt among the nation’s weakest home builders to contain systemic risk in the financial system. The clampdown came just as the Covid-19 pandemic slammed the industry and the economy.
