China developers propose offshore debt maturity extension

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According to sources, some Chinese property developers have voiced their intention to the regulators to extend their offshore bond maturities or undertake a debt restructuring, as a growing number of defaults hits the sector, causing turmoil for Fund Selectors who hold the bonds.

The developers proposed the ideas at a meeting jointly held yesterday by the National Development and Reform Commission (NDRC) and the State Administration for Foreign Exchange (SAFE).

The regulators, however, informed developers facing large offshore debt maturity to evaluate their repayment risks and report difficulties.

Reuters state that “the development underlines the frenetic behind-the-scenes efforts by the debt-laden developers and Chinese regulators to contain the fallout centred around embattled China Evergrande Group, as worries over the liquidity crisis in the property sector mount.”

“Developers were asked to report in great details about all their offshore bond repayment plans; they need to voice out if there are particular payments (for which) they’re seeing some difficulties in repayment,” sources claim.

NDRC said in a statement on Tuesday that the regulators have asked the unnamed companies in the meeting to improve their foreign debt structures and proactively prepare for repayment of both principal and interest on their foreign bonds, which will be a relief for many Fund Selectors heavily invested in the bonds around the globe.

They told the foreign debt issuers to use funds for approved purposes and “jointly maintain their own reputations and the overall order of the market”.

The meeting with the regulators took place in Beijing on Tuesday against the backdrop of developers Fantasia Holdings Group, Sinic Holdings and Modern Land defaulting on their maturing dollar bonds this month.

The liquidity crisis in China’s $5 trillion property sector has been, in part, fuelled by Evergrande, which is teetering on the brink of collapse with more than $300 billion in debt and is struggling to meet payment obligations.

A total of eight developers including Kaisa Group, Shimao and Sino-Ocean Group attended the meeting on Tuesday, according to financial media outlet Caixin.

Source: Reuters

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