Standard & Poor’s cuts Greenland’s state-backed Chinese property developer into ‘selective default’

A sign of Greenland Holdings Corp. Ltd.

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HONG KONG (Reuters) – Rating agency Standard & Poor’s Global downgraded China’s state-backed Greenland Holdings Inc (600606.SS) on Wednesday to “selective default” after the property developer extended the maturities of its $500 million bond. by one year.

Shanghai-based Greenland is the first state-backed developer to extend dollar bond repayments since the country’s real estate sector plunged into a debt crisis, triggering a series of defaults last year.

“We view the transaction as a distressed debt restructuring and amounting to a default,” Standard & Poor’s said in a statement explaining the “selective default” rating, adding that Greenland may have lacked the resources and financing options to repay the bonds in full at maturity had it not been for is extended.

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The latest rating downgrade comes amid renewed concerns about the sector, as real estate developers scramble to boost sales after transactions plummeted in the January-May period, as strict restrictions over the coronavirus in China and an economic downturn weighed on sentiment.

A desperate developer in China’s laggard property market is devising a new promotion to lure buyers, recently offering to take wheat and garlic as down payments. Read more

Among private developers, several players have already offered bond exchanges to ease their liquidity pressures, while some, including China Evergrande Group (3333.HK) and Sunac China (1918.HK), have defaulted on some payments.

Greenland, China’s largest and highly influential real estate developer, was dragged into a sector-wide debt crisis that ravaged international markets last year amid fears of a large-scale property developer collapse that could derail the economy.

Like many of its peers, it has stumbled from tighter controls on debt ratios introduced in January 2021 that have led to liquidity pressures across the sector.

Reuters last year exposed Greenland’s financial distress and subsequent bailout, highlighting the more proactive and targeted measures authorities are taking as they seek to reduce the risks posed by the industry. Read more

Greenland, which is responsible for high-profile projects at home and abroad, last week secured bondholders’ approval to extend the maturity of its 6.75% bond – with $488 million – by one year through June 25, 2023.

Standard & Poor’s said Greenland still faces a significant amount of external debt maturities over the next 12 months, totaling about $2.4 billion.

In an exchange file last month, Greenland said the group’s business operations, financial performance and short-term liquidity have been negatively affected by the COVID-19 outbreak in Shanghai and across the country as well as anti-epidemic measures.

Wu Zhengkui, director general of Greenland Financial Management, told investors that the company was “fully able” to repay on time for three more bond tranches due later this year, as only the June payments were affected by cash-flow disruptions due to the shutdown since March, according to the Note seen by Reuters. Read more

The mentioned bond was trading at 46.6 cents to the dollar on Wednesday, compared to 46.7 cents in the previous session.

Shanghai-listed Greenland shares fell 1.3%, against a 0.9% drop in the CSI Real Estate Index (.CSI000952).

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(Reporting by Claire Jim; Editing by Uttaresh V. and Mark Potter

Our Standards: Thomson Reuters Trust Principles.

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