S&P downgrades Chinese state-backed developer Greenland
RATINGS agency Standard & Poor's (S&P) on Monday (May 30) downgraded Chinese state-backed property developer Greenland over fears the company would default on a bond payment.
Since a government drive to curb excessive debt in the property sector, China's developers have sagged under the weight of massive borrowing which funded their building sprees.
S&P said in a note on Monday that it was downgrading Greenland from B- to CC as it believed the developer was "vulnerable to nonpayment of its senior notes upon maturity".
Greenland, which counts the Shanghai municipal government among its shareholders, has asked for a one-year extension for a US$488 million note due on Jun 25, Bloomberg reported on Friday.
S&P said it viewed the proposal as a "distressed maturity extension", and that it would "assess it as tantamount to a default" if completed.
The ratings agency added that it believed Greenland had "limited accessible cash" to support repayment on US$2.4 billion of offshore maturities due in the next year.
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Shanghai-based Greenland said its cash flow had been "adversely affected" by the city's recent coronavirus outbreak and lockdown, and that it had suspended around half of its sales offices across the country "due to pandemic-related restrictions", in a filing to the Hong Kong stock exchange on Friday.
The developer also noted the "strengthened regulatory environment around the PRC real-estate industry" as a factor in its liquidity woes.
Greenland is the latest Chinese developer to warn of defaults, with property giant Sunac missing a US$29.5 million payment earlier this month.
So far, one of the most prominent real estate developers embroiled in Beijing's drive to stamp out debt is Evergrande -- arguably the first domino to fall in China's property crisis.
Last year it began to buckle, leading to protests from homebuyers and investors as executives struggled to restructure US$300 billion in liabilities.
The company's travails have reverberated through China's property sector in recent months, with multiple smaller firms also defaulting on loans.
The Chinese government this month cut a a key mortgage reference rate, in a move seen by analysts as an effort to boost home sales.
Beijing's unrelenting approach to Covid-19 outbreaks has snarled supply chains and locked down tens of millions of people, hitting major financial, industrial and tourist hubs. AFP
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