China: $124.5 billion in real estate bonds in default
China's real estate sector faces an increasingly severe crisis as experts suggest further debt defaults are imminent. According to a Reuters report, a staggering $124.5 billion of real estate bond industry bonds out of $175 billion issued are going into default. This figure includes Country Garden 's dollar bonds, which were recently classified as in default for failing to meet a redemption clause.
About $60.5 billion of Chinese real estate bonds mature over the next six months, with offshore bonds accounting for at least a third of that amount. Country Garden's international bondholders are now urgently seeking talks with the company to address the situation.
The financial difficulties are not limited to Country Garden, as other companies are also showing signs of trouble. Sino-Ocean Group , a state-backed entity, proposed extending the bond interest payment deadline due to "operational difficulties". Additionally, Gemdale , another property developer, saw a decline in bond values after the unexpected resignation of its chairman raised solvency concerns.
Dalian Wanda Group is also facing difficulties as it is strategically seeking to avoid a 30 billion yuan ($4.11 billion) repayment contingent on the success of its initial public offering (IPO) this year.
Real estate sales data remains weak, with no signs of improvement. This is especially concerning for developers who have not yet defaulted on their debts. September data revealed a third consecutive monthly decline in new home prices, further exacerbating the challenges faced by the sector.
The financial environment for developers, especially private ones, is tight, making it difficult for them to find qualified resources to obtain financing. This is hampering their ability to issue collateralized bonds, such as those backed by shopping malls or office buildings.
Overall, China's real estate sector is in a precarious position, with a high level of debt defaults and sluggish sales. It is crucial that developers find solutions to address their financial difficulties and stimulate the market to prevent further complications in the future.
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The article China: $124.5 billion in real estate bonds in default comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-1245-miliardi-di-dollari-di-obbligazioni-immobiliari-in-default/ on Tue, 24 Oct 2023 12:30:13 +0000.