China builders with bond, trust obligations back in spotlight

Hong Kong

BOND and trust obligations will again be in the spotlight for China's troubled property sector this month, after further signals of investor concern about builders' repayment capabilities.

Stressed developers face at least US$3.1 billion of payments on dollar and onshore public bonds, according to data compiled by Bloomberg, a pullback from the previous month's level. In addition, the sector has 53.6 billion yuan (S$11.4 billion) of trust payments due in April, according to data tracker Use Trust.

Builders dominate China's high-yield dollar note market, which lost a record 19 per cent in the first quarter on top of the prior quarter's 15 per cent loss, according to a Bloomberg total return index. All of China's offshore bond defaults this year have come from the country's property sector, and the rate of such payment misses is again set for an all-time high.

As concerns about balance-sheet transparency persist and new-home sales continue to slump, a number of embattled developers have yet to release audited results for last year. Some, including Sunac China Holdings, said they couldn't even disclose unaudited figures.

Separately, a unit of troubled property developer China Evergrande Group has said that construction work has resumed at 95 per cent of Evergrande's projects across the country as at late March.

Evergrande has resumed work at 734 developments in all of China as at Mar 27, including 424 projects recovering to normal construction levels, according to a post on Saturday (Apr 2) on the official WeChat of the developer's Pearl River Delta business unit. The post did not give a figure for Evergrande's total number of developments.

Evergrande is the world's most indebted property developer, with over US$300 billion in liabilities. It is struggling to repay bondholders, banks, suppliers, and deliver homes to buyers, epitomising a bloated industry suffering from the Chinese government's deleveraging campaign.

Evergrande will "continue to maintain the normal construction of the projects in order to deliver the buildings to the owners with guaranteed quality and quantity at all costs", according to the post.

Company chairman Hui Ka Yan has pledged multiple times since 2021 that the company would resume construction work at full steam to ensure home deliveries.

Hui told staff in February that the company aimed to deliver 600,000 apartments in 2022, according to a source with direct knowledge of the matter and media reports.

"With the strong support from the provincial government, Evergrande's Pearl River Delta business worked to accelerate the resumption of work and production," Pearl River Delta said in the WeChat post. BLOOMBERG, REUTERS