China's R&F Properties Hong Kong arm put in 'selective' default by S&P

[LONDON] Chinese developer Guangzhou R&F Properties, which has a number of super-sized projects in global cities such as London, saw its Hong Kong offshoot declared in "selective default" on Thursday (Jan 13) after it pushed through a bond payment delay.

Credit rating agency S&P Global took the step after the struggling firm got approval from lenders to delay a US$725 million senior unsecured note payment that had been due on Thursday (Jan 13).

"We view the transaction as distressed restructuring tantamount to a default because R&F HK has insufficient resources and limited funding options to repay the maturing notes in whole in the absence of the transaction," S&P said.

"Also, investors are being paid less than originally promised due to the 6-month maturity extension and the tender price being 17 per cent below par for one of the offer options."

S&P said it was keeping the rating R&F's main parent company, Guangzhou R&F Properties, unchanged at "CC", because it was not a guarantor of the bond in question, although it warned it could cut it.

"We will further review the credit profiles of Guangzhou R&F and subsidiary R&F HK after we reassess the companies' financial and liquidity positions," S&P said. "The group faces several hurdles to substantially improve its weak liquidity."

R&F is latest Chinese builder to be facing turmoil. The country's property market has been pushed into crisis by efforts to curb overborrowing and the woes of China Evergrande, the world's most indebted developer, which defaulted late last year.

R&F's struggles are being watched just as closely though in some of the global cities as it has a number of unfinished mega projects including one on the Thames in London which it bought for £59 million pounds (S$109 million)in 2018 from another Chinese firm that was facing difficulties at the time.

REUTERS