Chinese developer SCE Group seeks offshore debt restructuring after default

CHINA SCE Group said on Wednesday (Oct 4) that a non-payment on a syndicated loan has triggered a default under its US dollar bonds and it would explore a holistic solution to all its debt.

The Xiamen-based company is the latest to join a long list of Chinese property developers who have defaulted on their offshore debt and begun a restructuring process. But only a few have announced restructuring terms.

China Evergrande Group, in the centre of the sector’s debt crisis, said last week its main unit in China was unable to issue new debt due to an ongoing investigation, complicating its restructuring plan that creditors were originally scheduled to vote on this month.

The market is also watching if China’s largest private developer Country Garden will avoid a default again mid-this month, by making US$15 million coupon payment before the grace period ends.

SCE said in a Wednesday filing that it will suspend trading in its four US dollar bonds worth a total of US$1.8 billion from Thursday.

“The group’s liquid cash and bank deposits may not be sufficient to meet its current and future obligations,” it noted, citing declining sales and tightening liquidity since the second quarter.

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It explained the payment it did not make was on an instalment of principal and interest worth US$61 million of a March 2021 syndicated loan, which may result in demands for early repayment from its other creditors. It has not received such demands yet, however, it added.

Confidence in the property sector, which accounts for one-fourth of economic activity, has sunk since 2021 when a crackdown by Beijing on credit accumulation by developers fuelled a debt crisis.

China’s new home prices rose slightly in September, breaking a four-month decline, private data showed, as developers sped up launches to take advantage of a recent slew of support measures, including easing some borrowing rules and relaxing of home buying curbs in some cities. REUTERS