Economics & Finance

China’s property sector rising more fears about default

by Daily Sabah

Growing worries about defaults at Chinese property developers sapped investor sentiment on Tuesday amid fresh credit rating downgrades and uncertainty about the fate of the China Evergrande Group as it scrambles to raise cash by selling assets.

Adding to industry strain, a mid-size Chinese real estate developer failed to make a $206 million payment due to bondholders Tuesday.

Fantasia Holdings Group announced it missed the payment in a statement issued through the Hong Kong Stock Exchange. It gave no explanation but said it had asked for the trading of Fantasia shares to be suspended.

Evergrande is facing one of the country’s largest-ever debt restructurings as it wrestles with more than $300 billion of debt. The company last month missed making coupon payments on two dollar bond tranches.

The possible collapse of one of China’s biggest borrowers has triggered worries about contagion risks to the property sector in the world’s second-largest economy, as its debt-laden peers are hit with rating downgrades on looming defaults.

Evergrande requested a halt in the trading of its shares on Monday pending an announcement about a major deal. Evergrande Property Services Group also requested a halt referring to “a possible general offer” for company shares.

China’s state-backed Global Times said Hopson Development was the buyer of a 51% stake in the property business for more than HK$40 billion ($5.1 billion), citing unspecified other media reports.

Evergrande declined to comment ahead of an official announcement, as trading in the company’s shares remained suspended throughout Tuesday.

Read the full story on Daily Sabah

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