Road King becomes first Hong Kong developer to default on offshore bonds

ROAD King Infrastructure has suspended coupon payments of US$22.62 million on its offshore bank debt, it said on Thursday, making it the first Hong Kong developer to default on its bond payments since the China property crisis.

Property markets in mainland China and Hong Kong have been under pressure in recent years, with plunging sales and tightening liquidity. On the mainland in particular, many companies have defaulted despite repeated government attempts to revive weak consumer demand.

Road King, a small-sized developer that earns the majority of its revenue from mainland China, said last week it had not made payment on the July 12 due date for its 2029 bond, but it had a grace period, which expired on Tuesday.

Its offshore indebtedness stood at US$1.51 billion as of Aug 14, and the default deepens contagion risks for the Chinese-controlled territory.

“In light of the challenges that the group is facing, the company has concluded that it should immediately explore a holistic solution to the current situation to secure the long-term future of the company for the benefit of all of its creditors and other stakeholders,” the developer said. REUTERS