Chinese developer Shimao seeks payment extension on public bond

CHINESE developer Shimao Group Holdings proposed delaying repayment for a publicly-raised local bond for the first time, in the latest sign of liquidity pressures building in the property market.

The builder's key onshore unit Shanghai Shimao is seeking to delay paying principal on a 500 million yuan (S$103.3 million) note due May 22 for a year, according to a Shanghai exchange filing late Monday (May 9). Shanghai Shimao will arrange a meeting with investors, the firm said, adding that the delay doesn't amount to a default event.

The mounting debt problems of the luxury builder, long considered one of China's healthier property firms, have become a bellwether for financial contagion in the nation's embattled property industry. Scrutiny of its finances has mounted amid a broader debt crisis in the real estate sector sparked by a government crackdown on excessive borrowing that's led to record corporate-bond defaults.

Shimao had requested a number of extensions in recent months to repay loans, asset-backed securities and trusts. The move to delay paying principal on its notes issue comes after the unit obtained investor approval last month to stretch payoff for a privately-raised puttable note over the coming year.

Credit ratings for the firm, which held an investment-grade score as recently as last year, have been repeatedly cut.

Fitch Ratings withdrew its grades last month. Failure by Hong Kong-listed Shimao to release unaudited 2021 results caused trading in its shares to be suspended in Hong Kong at the start of April. BLOOMBERG