China SCE, Shimao Units Miss $225mn Trust Payments

Chinese property developers Shimao Group and China SCE’s main units missed payments on RMB 1.6bn ($225mn) of trust borrowings. Xiamen Zhongjun Industrial Co., a unit of SCE and one of the guarantors, failed to repay its 50% share of a trust product due at end-September. While Shimao is already known to have been in default with a restructuring plan in place, the news on China SCE is a surprise as it repaid a $500mn dollar bond earlier this year and sold also an $150mn worth of senior notes in what it called a demonstration of investor confidence “at a time when the financial market was in turmoil”. China SCE was among the 16 developers selected by Beijing to issue state-guaranteed onshore bonds, given that they are considered financially stronger than peers. The trust product by SCE was called Hongtai No. 13, and was used to finance the construction of a residential and commercial project. Bloomberg notes that the project’s construction and sales are ongoing and that Everbright Trust was seeking delayed repayments in installments to investors.

Shimao’s dollar bonds are trading at 11-14 cents on the dollar and SCE’s bonds due beyond 2023 are at 13 cents on the dollar.

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