Glorious seen as most likely to default next
Series of overdue payments reflects the very weak cash flow and liquidity profile of the China property firm, say analysts
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AFTER Kaisa Group Holdings Ltd defaulted on its dollar bonds earlier this week, the market got to wondering, who could be next? They didn't have to look very far.
Attention has rapidly shifted to Glorious Property Holdings Ltd, whose controlling shareholder is billionaire Zhang Zhirong. It must repay US$19.5 million of interest on Monday on its US$300 million of 13 per cent notes due 2015. Moody's Investors Service cut its senior unsecured rating to Ca, just one step from the lowest grade typically signalling default, on April 20, citing sliding sales.
Investors got a reminder of the risks of investing in Chinese companies' some US$275 billion of dollar bonds outstanding when Kaisa missed a grace period to pay US$52 million of overdue interest on two of its US currency notes, making it the first developer from the nation to default on its dollar debt. China's weakest economic growth since 1990 and a slumping real estate market are only adding to concerns.
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