China developer Sino-Ocean said to seek yuan bond extensions

CHINESE property developer Sino-Ocean Group Holding told some bondholders that it plans to extend all its local yuan bonds outstanding, including pushing back maturities of four notes by up to 30 months, according to people involved in the private conversations. 

The state-backed developer’s extension plan is a reminder that China’s unprecedented real estate debt crisis is far from over, despite emerging signs of relief in the credit market after two major developers said they plan to repay some maturing debt. Sino-Ocean’s discussions also intimate the debt risk spreading beyond the private sector. 

The four yuan bonds comprise a 1.5 billion yuan (S$278.9 million) note due 2024; a 1.3 billion yuan bond due 2024; a 1.2 billion yuan note due 2026; and a 3 billion yuan bond due 2024, said the people, who requested anonymity in discussing private matters. Sino-Ocean has offered to repay the notes via six installments every three months, starting from the 15th month, they added. 

The builder told creditors that housing sales continue to slump and there is no improvement in liquidity, the people said. Sino-Ocean added in its message to creditors that a long-term debt extension plan could help the builder further stabilise its operations and preserve value for all investors, they said. 

Sino-Ocean plans to convene bondholder meetings later this month to vote on the proposal, the people said. It also plans within this week to notify bondholders of extension proposals for all its other yuan notes outstanding, containing similar key terms, they said.

China’s 28th-largest developer began showing signs of liquidity stress in early July, when it proposed to some major holders of the 1.5 billion yuan bond due 2024 to extend paying the notes. It also sought to extend the coupon payment of its US dollar bonds. BLOOMBERG