Chinese manufacturing company Shimao Group Holdings Ltd. said it defaulted on a $1 billion bond due today, adding to a record year of offshore bond defaults in the sector, according to Bloomberg.
The luxury builder said in a Hong Kong stock market filing that it has also defaulted on principal payments relating to some other offshore debt and is in talks with its creditors while trying to reach “amicable solutions”. If Shimao can’t, “creditors may have the right to demand acceleration of repayment” and take enforcement action, according to the company.
The company has faced mounting concerns about its financial health for months as a sweeping crackdown on China’s property industry has triggered a record wave of defaults. Shimao, the country’s 14th largest builder based on notarized sales last year and which also builds commercial properties, last month defaulted on a private promissory note, a delay that heightened concerns about hidden bills among Chinese builders.
“Due to market uncertainties regarding debt refinancing and generally difficult operating and financing conditions, the group has experienced negative developments in its credit ratings and the appearance of principal defaults under certain of its offshore debts,” Shimao said in its filing. today.
The company also said it has appointed Admiralty Harbor Capital Ltd. as financial advisor and Sidley Austin as legal advisor to help evaluate its capital structure, liquidity and options.
Shimao said it has not received any notice to accelerate repayment from its creditors, but has received written support from the majority of lenders on its long-term dual-currency loan. The lenders also expressed that they do not intend to take any enforcement action at this stage regarding the financing, according to the filing.
The construction company is among the largest issuers of real estate debt in China. It has nearly $10 billion in onshore and offshore bonds outstanding, according to data compiled by Bloomberg.