HONG KONG (Reuters) – Chinese language state-backed Greenland Holdings Corp Ltd was on Wednesday downgraded to “selective default” by ranking company S&P World, after the property developer prolonged the maturity of its $500-million bonds by one yr.
Shanghai-based Greenland is the primary state-backed developer to increase a dollar-bond fee for the reason that nation’s property sector plunged right into a debt disaster, triggering a string of defaults, final yr.
“We view the transaction as a distressed debt restructuring and tantamount to a default,” S&P stated in a press release explaining the “selective default” ranking, including Greenland doubtless would have lacked the sources and funding choices to totally repay the notes upon maturity had they not been prolonged.
The most recent downgrade comes amid renewed considerations concerning the sector, with property builders scrambling to spice up gross sales after a nosedive in transactions in January to Might, as China’s strict COVID-19 curbs and financial downturn hit sentiment.
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Amongst personal builders, many gamers have already provided bond exchanges to ease their liquidity pressures whereas just a few, together with China Evergrande Group and Sunac China, have defaulted on some funds.
Greenland, China’s No. 7 property developer and extremely leveraged, turned swept up in a sector-wide debt disaster that roiled worldwide markets final yr amid fears {that a} large-scale developer collapse may derail the economic system.
Like lots of its friends, it reeled from tighter caps on debt ratios launched in January 2021 that resulted in a liquidity squeeze throughout the sector.
Reuters final yr revealed Greenland’s monetary straits and subsequent bailout, highlighting extra energetic and focused motion being taken by authorities as they sought to restrict dangers posed by the business.
Greenland, accountable for marquee tasks at residence and overseas, final week secured bondholders’ approval to increase the maturity of its 6.75% notes – with $488 million excellent – by one yr to June 25, 2023.
S&P stated Greenland nonetheless faces a major quantity of offshore debt maturities over the following 12 months, totalling about $2.4 billion.
In an change submitting final month, Greenland stated the group’s enterprise operations, monetary efficiency and short-term liquidity had been adversely affected by COVID-19 outbreaks in Shanghai and throughout the nation in addition to the pandemic management measures.
Wu Zhengkui, normal supervisor of Greenland’s finance division, instructed traders the agency was “absolutely succesful” of repaying on time three different bond tranches due later this yr, because the June fee was solely affected by cashflow disruptions resulting from lockdowns since March, based on a memo seen by Reuters.
The bond in query traded at 46.6 cents on the greenback on Wednesday, in comparison with 46.7 cents within the earlier session.
Shares of Greenland listed in Shanghai eased 1.3%, versus a 0.9% drop within the CSI Actual Property Index.
Reporting by Clare Jim; Enhancing by Uttaresh.V and Mark Potter
