China's developers face US$1.3b in December bond payments

[SHANGHAI] China's stressed developers face nearly US$1.3 billion of bond payments in December, after a month in which investor sentiment toward the property sector showed signs of stabilising despite fresh signs of liquidity pressure.

The total was US$2 billion in November, and there have been no defaults reported according to Bloomberg-compiled data as of Friday, after multiple instances in October.

Still, investor scrutiny persists regarding principal and interest payments as a cash crunch engulfs the real estate industry.

Centre stage is China Evergrande Group and Kaisa Group Holdings, two of the country's biggest dollar-bond issuers.

An Evergrande unit and Kaisa have grace periods ending by mid-December on a combined US$170.9 million of coupons.

November saw yields on a Bloomberg gauge of riskier notes surge to a record 24.6 per cent early in the month before pulling back, amid signals that softer policies are on the way for property firms. But at around 20 per cent, yields remain too high for most builders that need to refinance imminently maturing debt.

Meanwhile, billionaire owners of Chinese developers have dipped into their own pockets and a reported plan to loosen controls for builders issuing local-currency bonds is likely to benefit only higher-quality firms, say analysts.

BLOOMBERG