[1/2]Construction site of a residential building by Chinese developer Country Garden on August 18, 2023 in Tianjin, China.Reuters/Tingshu Wang/File photo Obtaining license rights
HONG KONG, Sept 19 (Reuters) – Chinese developers Sunac (1918.HK) and Country Garden (2007.HK) offer some relief to the crisis-hit property sector by entering into debt deals with creditors. However, the outlook remained clouded by uncertainty. Recovery in home sales.
Shares in Sunac China Holdings rose as much as 14% on Tuesday after creditors approved a $9 billion offshore debt restructuring plan. This is the first green light for such a debt review by a major Chinese developer.
Separately, cash-strapped Country Garden has received approval from creditors to extend repayments on another domestic bond, the last of eight bonds it had sought extensions for, sources said. The two made the announcement on Tuesday.
The moves come as the Chinese government steps up efforts to revive the real estate sector, which accounts for about a quarter of the world’s second-largest economy, and has announced a number of support measures in recent weeks. I woke up.
Sunac announced late on Monday that creditors holding 98.3% of the company’s total bonds, who attended the vote, approved a restructuring plan proposed and agreed to by some creditors in March. The developer plans to ask a Hong Kong court to approve the plans at a public hearing scheduled for October 5.
As part of the restructuring terms, some of the debt will be exchanged for convertible bonds backed by Hong Kong-listed shares and new bonds with maturities between two and nine years.
Gary Ng, senior economist at Natixis Corporate & Investments, said: “We’re going to take this as a positive… We haven’t seen much progress in the offshore market, so this is something that at least some Chinese developers will agree on.” “It shows that we are doing so.” Bank.
He added that investors could get something back if the plan is executed well and depends on whether the recovery in China’s real estate market generates enough cash flow.
Sunac’s Hong Kong-listed shares were up more than 4% as of 0310 GMT, with Country Garden trading 1% higher.
Sunac is one of a string of Chinese developers to default on offshore debt since an unprecedented liquidity crisis hit the real estate sector in 2021, while Country Garden is still missing offshore payments. do not have.
Real estate sector outlook
Major developers undergoing debt restructuring include China Evergrande Group (3333.HK), whose liquidity crunch became a turning point in the country’s real estate crisis.
The latest debt deal with creditors will give Chinese developers some breathing room and help them avoid defaults and a messy liquidation process, but the deal’s success will depend on the recovery of the real estate sector.
Despite the Chinese government’s policies to support the sector, housing prices continue to fall. New home prices fell at the fastest pace in 10 months in August, the latest data showed, while the decline in property investment and sales deepened.
Betty Wang, senior China economist at ANZ, said the support package could stimulate some “genuine demand” ahead of the traditional late-September to early-October sales season, particularly in top-tier cities. He said that there is a sex.
“However, the pace and extent of such an upturn would be much smaller than in previous cycles,” he said in a report released Tuesday.
“It is also questionable whether we can begin a sustainable recovery, especially given the uncertain employment outlook, deteriorating income flows, changing expectations and the potential for increased housing supply in the longer term.”
Reporting by Donny Kwok and Xie Yu in Hong Kong, Steven Bian in Shanghai, and Kevin Huang in Beijing. Written by Anne-Marie Roantry and Sumeet Chatterjee.Editing: Lincoln Feast
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