A prominent Chinese real estate company has halted payments on offshore debt, exacerbating the ongoing challenges in the beleaguered property sector. Sino Ocean, identified as one of China’s top 20 real estate developers, revealed in a stock exchange filing on Friday its decision to temporarily cease payments on US dollar-denominated bonds and suspend their trading as part of a broader debt restructuring initiative.
The company cited “growing liquidity pressures” resulting from a sales downturn in the broader industry since 2021, which has hindered its ability to meet its financial obligations. Sino Ocean noted a rapid decline in contracted sales and increased uncertainty in asset disposals this year.
In its statement, the company respectfully requested creditors to grant it time to address the current liquidity challenges and collaborate with its advisors to formulate a recovery plan.
Sino Ocean, headquartered in Beijing, specializes in residential and commercial development, boasting a portfolio of approximately 600 projects spanning over 80 cities in China, including high-end office buildings and shopping complexes.
As of June, the company’s total current liabilities, representing offshore debt due within a year, had reached nearly 60 billion yuan (approximately $8.4 billion), according to its interim annual report.
The company and its financial and legal advisors, Houlihan Loukey and Sidley Austin, have not yet responded to inquiries about the expected duration of the restructuring process, potential effects on onshore debt payments, or any legal ramifications.
Following the announcement, Sino Ocean’s shares plummeted by 10.6% in Hong Kong, reaching just 59 Hong Kong cents (about 8 US cents).
This development adds to growing concerns surrounding China’s property sector, which have become increasingly prominent in recent weeks. Country Garden, China’s largest homebuilder in the previous year, is also grappling with the possibility of default and suspended trading of some bonds last month to explore debt restructuring options. Data from the National Bureau of Statistics on Friday revealed an 8.8% decline in property investment in China during the first eight months of the year compared to the same period in the previous year. Property sales by floor area also decreased by 7.1% from January to August compared to the first eight months of 2022.
