Zhenro Properties Group and Sunac China defaulted on offshore debt, trembling China’s property sector. Zhenro missed payment on two U.S. dollar-denominated bonds. The company had made the announcement in a stock exchange filing. Zhenro should at least pay $8.35m for its $200m or 8.35% in 2024 bonds. Plus it must pay $12.07m for its $340m or 7.1% of 2024 notes. The due date was on March 10.
During the filing of the default, Zhenro blamed the Covid lockdown in Shanghai. It accused that the major company operation was interrupted in recent weeks. So, it brought harm to their liquidity. There is no sign of abating. The company evaluated that it won’t be able to meet its interest payments. The payments are $12.86m, $8.3m, and $11.42m. These are for bonds in 2025 7.35%, 2023 8.3%, and 2024 7.875%, respectively. Zhenro promised to pay its interest payments by May 31.
Investors might request an acceleration of payment for the bond under default terms. But the company is yet to receive the notice. Currently, Zhenro’s cash price is below 20, it continues trading at distressed levels. Sunac China also missed the payment. The company hasn’t paid a $29.5m coupon due on April 11 on a dollar bond. It marks the first missed offshore payment for the nation’s third largest property developer.
Sunac is struggling to find a solution to meet the payment deadline. China’s property sector currently suffers from offshore debt obligations. The company confirmed that it was holding a communication with offshore creditors. It happened after the downgrades by global rating firms. Sunac also seeks payment extensions with onshore bondholders. China Evergrande Group for instance was the country’s number one in top-selling developers. But now it turns out into the world’s most indebted property company.