Chinese property developer Shimao misses repayment of billion-dollar bond

HONG KONG, July 3 (Reuters) – Chinese property developer Shimao Group (0813.HK) missed interest and principal payments on a $1 billion offshore bond due on Sunday in the latest blow to the market struggling Chinese real estate.

The non-reimbursement was the first missed public offshore payment for the Shanghai-based developer. With $6.1 billion in international bonds outstanding, Shimao is the sixth-largest issuer among Chinese developers, according to Refinitiv.

China’s real estate sector has been hit by a series of defaults on offshore bonds, highlighted by China Evergrande Group (3333.HK), once the country’s best-selling developer but now the most indebted real estate company in the world. world.

Three of the top five issuers – Evergrande, Kaisa Group (1638.HK) and Sunac China (1918.HK) – have already defaulted on their dollar bonds.

Shimao was unable to pay a total of $1.02 billion in principal and interest to creditors of the 4.75% senior notes, the promoter said in a filing to the Hong Stock Exchange on Sunday. Kong, citing “market uncertainties regarding debt refinancing” and “operating and funding difficulties.” conditions”.

He added that he had also failed to make principal payments on certain other offshore debts, without giving details.

The developer has not received notice of accelerated repayment from its lenders, he said, suggesting creditors have not taken enforcement action.

Shimao hired Admiralty Harbor Capital as financial advisor and Sidley Austin as legal counsel to help assess and explore ways to manage the liquidity crisis.

Meanwhile, the creditors of its two syndicated loans have agreed to give the cash-strapped Chinese developer a break.

Shimao said it received written notice of majority lender support for two syndicated loans agreed in 2018 and 2019, in which HSBC acted as the main facilitator for the dual-currency loans.

The creditors, who “generally maintain that the company continues to explore the possibility of an agreement and the implementation of a possible restructuring with its affected stakeholders”, were willing to allow Shimao to continue to manage the business with minimal disruption, according to the filing. .

The Shimao bond in question was trading at 12.141 cents to the dollar on Friday, according to Duration Finance.

Shimao extended its onshore debt obligations and divested assets to raise funds, while its contract sales in the first five months fell 72% from a year ago.

Reporting by Selena Li and Clare Jim; Editing by Louise Heavens and Edmund Blair

Our standards: The Thomson Reuters Trust Principles.