Bond Market News

Chinese property developers have proposed maturity extension of their offshore bonds or a debt restructuring in a meeting with two regulators, say sources as per Reuters. The regulators involved were the National Development and Reform Commission (NDRC) and the State Administration for Foreign Exchange (SAFE). While names of these developers were not available, sources said that regulators told those facing large offshore debt maturities to evaluate their repayment risks and report difficulties. The regulators have asked the developers to proactively prepare for repayment of both principal and interest on their foreign bonds with the NDRC saying that it was to “jointly maintain their own reputations and the overall order of the market”. UOB Kay Hian’s director of brokerage, Steven Leung said, “When NDRC is involved, there may be even a chance that the primary bond market can be active again, giving opportunities to better quality developers to refinance”.

SCMP cites an S&P report that notes more than half of its rated portfolio of Chinese property developers are “most at risk”, rated between B- to B+ with a real risk of default as ~$84bn in debt is expected to mature by end-2022. The developments come after Evergrande nearly defaulted on its offshore bond while smaller peers like Fantasia, Sinic and Modern Land (China) have all defaulted in the last month. Below is a list of prominent developers that have bonds maturing by year-end:

• Central China Real Estate (CCRE) wrote to the provincial government in early August asking for help, and has a $386mn bond maturing on November 8, 2021
• Agile Group has a $200mn bond maturing on November 18, 2021
• Ronshine China has a $150mn bond maturing on December 3, 2021
• Kaisa, the first Chinese developer ever to default on its offshore bonds six years ago, has a $400mn bond maturing on December 7, 2021