The Evergrande crisis is spreading. Here are other Chinese property developers that are in default or wobbling.

[Hamartia Antidote]

The Evergrande crisis is spreading. Here are other Chinese property developers that are in default or wobbling.

China's Evergrande crisis is shaking the property sector, causing defaults across the board. It's one of at least seven struggling to make payments.

www.businessinsider.com

China's property developers have grown at breakneck speed over the last decade, powered by huge amounts of debt. Authorities have started to rein them in with strict debt limits, but snapping an addiction isn't easy.

Evergrande is one of China's biggest property developers and among the most indebted companies in the world, owing more than $300 billion. It's creaking under the pressure and has recently failed to make numerous offshore bond payments.

Just before a 30-day grace period was set to expire, Evergrande wired $83.5 million Thursday to pay interest on an offshore dollar bond. But it faces more deadlines around missed bond payments, and $45.2 million in interest is due later in October. If Evergrande fails to cough up it will officially be in default.

The Evergrande crisis is now spreading to other developers and threatens to rock China's real estate sector, which economists say makes up around 30% of the economy.


Perhaps the most worrying default so far has been mid-sized developer Fantasia. Earlier this month it failed to pay a $206 million dollar bond maturing on October 4, according to a filing.

The default was troubling because the company had reassured investors only two weeks earlier that there was no liquidity issue, said Craig Botham, chief China economist at Pantheon Macroeconomics.

"A great many Chinese developers are in more fragile positions than their balance sheets might suggest," he said.

Fantasia is smaller than Evergrande, with revenue of $2.76 billion in 2019, compared with Evergrande's $69.15 billion, according to Bloomberg data.


Sinic Holdings defaulted on a bond and interest payments worth $250 million on Monday, Bloomberg reported. It's another mid-sized property developer with revenue of $3.91 billion in 2019.

Evergrande-related stress has slowed sales in the property sector and driven up borrowing costs, adding to pressure on developers like Sinic.

The yield on riskier Chinese dollar bonds – which are big sources of funding for developers – soared to 20% earlier this month.

Fitch Ratings downgraded Sinic to "restricted default" on Thursday.



China Properties Group is considerably smaller than Sinic, but it is also in trouble. It said on October 15 that it had defaulted on bonds worth $226 million, in a filing on the Hong Kong stock exchange.

There's likely to be little respite for developers this year, according to UBS. The bank's analysts said in a note Monday that it expects new property starts to tumble 20% year-on-year in the fourth quarter, "bringing further downward pressure on the economy."



Modern Land earlier in October asked to delay payment of a $250 million bond for three months to January, saying it wanted to take measures to "avoid any potential payment default."

Yet the mid-sized developer, which owns 200 apartment and office properties across China, scrapped those plans late Wednesday. It said in a filing it is facing liquidity problems and is seeking to hire financial advisers.

The chairman and president of Modern Land have said they'll pump around $123 million into the company.



Pressure on Xinyuan led it to swap $208 million of dollar bonds with debt that matures in two years' time, in a distressed-debt exchange.

The ratings agency Fitch gave Xinyuan a "CC" score on Wednesday, meaning some kind of default is probable. Fitch said the mid-sized developer faces a "tight liquidity situation, with weak funding access and large offshore bond maturities in the next twelve months."


S&P Global Ratings earlier this month downgraded Greenland, a massive developer with revenues of $61.98 billion in 2019. It got a "B+", meaning it's currently able to pay its debts but is vulnerable to a shock.

Greenland is struggling as its borrowing costs shoot higher during the Evergrande crisis, with domestic and foreign investors now much less keen to lend to property companies.

"The company's cash could continue to deplete over the next 12 months due to weaker sales and cash collection," S&P said.

Insider contacted all the property developers mentioned in this article for comment but none responded.

 

[ARMalik]

I Hope the Chinese Govt is going to let these failed companies fail. I really want this Evergrande to fail and go into bankruptcy. These companies mainly have loans in the form of Bonds mainly held by US/EU investors. These investors are NOT going to GET A DIME back once these companies fail. Bye, bye to $300 Billion from Evergrande, and another $700 Billion from other Chinese Developers. In other words, US and EU investors will loose over, wait for it, $1-TRILLION DOLLAR OF INVESTMENT !!!

 

[xyxmt]

you keep posting this Evergrande thing for last 6 months and hoping this will take down Chinese economy as property bust of 2000 did to US while forgetting Chinese govt is overloaded with your US dollars while even back in 2000 US govt was heavily indebted. I think Chinese govt's checking account has more money than 300 billion

 

[patero]

I Hope the Chinese Govt is going to let these failed companies fail. I really want this Evergrande to fail and go into bankruptcy. These companies mainly have loans in the form of Bonds mainly held by US/EU investors. These investors are NOT going to GET A DIME back once these companies fail. Bye, bye to $300 Billion from Evergrande, and another $700 Billion from other Chinese Developers. In other words, US and EU investors will loose over, wait for it, $1-TRILLION DOLLAR OF INVESTMENT !!!

Firstly, Evergrande just made a late payment on their high yield international bonds a day before they officially defaulted, avoiding legal action and a ratings downgrade. They are sending a positive signal to international bond investors that they won't prioritise local investors at their expense.

Secondly, most of Evergrandes 305$ billion in liabilities are either borrowings from Chinese banks and other lenders as well as trade payables (wages, contractors). Their total US denominated bond issue is about 4.4 billion US. If Evergrande collapses (unlikely, it is in the early stages of a restructure), it will mainly affect its local creditors. The contractors and wages owing alone totals 93 billion US.The 1.5 million new home owners with unfinished or yet to be constructed homes are at risk of losing their deposits, many of whom have already brought off the plan and fully paid Evergrande.

As for the 1trillion$ in investment you think that international investors are going to lose, you're confusing the total amount of FDI in China with high risk exposure bonds, which amounts to about $18 billion.

 

[khansaheeb]

View of of Evergrande and other things about China:-

Christopher Balding: Inside China’s Evergrande Crisis, the Buildup Against Taiwan, and the Inner Workings of China’s Financial System

“The risk is not Evergrande itself … This is metastasizing into other areas.” We sit down with China expert Dr. Christopher Balding, a former professor at...

www.theepochtimes.com

 

[patero]

you keep posting this Evergrande thing for last 6 months and hoping this will take down Chinese economy as property bust of 2000 did to US while forgetting Chinese govt is overloaded with your US dollars while even back in 2000 US govt was heavily indebted. I think Chinese govt's checking account has more money than 300 billion

There is not going to be an economic collapse when the CCP controls all of the levers in its economy, but Evergrande exposes systemic problems in an economy that is over reliant on a highly leveraged property sector to drive economic growth. The period between now and the next party congress will determine how Xi Xiping balances the political need to maintain GDP growth and the economic need to realign Chinas economy from reliance on an unsustainable property and infrastructure sector.

 

[ARMalik]

Firstly, Evergrande just made a late payment on their high yield international bonds a day before they officially defaulted, avoiding legal action and a ratings downgrade. They are sending a positive signal to international bond investors that they won't prioritise local investors at their expense.

Secondly, most of Evergrandes 305$ billion in liabilities are either borrowings from Chinese banks and other lenders as well as trade payables (wages, contractors). Their total US denominated bond issue is about 4.4 billion US. If Evergrande collapses (unlikely, it is in the early stages of a restructure), it will mainly affect its local creditors. The contractors and wages owing alone totals 93 billion US.The 1.5 million new home owners with unfinished or yet to be constructed homes are at risk of losing their deposits, many of whom have already brought off the plan and fully paid Evergrande.

As for the 1trillion$ in investment you think that international investors are going to lose, you're confusing the total amount of FDI in China with high risk exposure bonds, which amounts to about $18 billion.

Give it another few days dude and see what happens.

There is not going to be an economic collapse when the CCP controls all of the levers in its economy, but Evergrande exposes systemic problems in an economy that is over reliant on a highly leveraged property sector to drive economic growth. The period between now and the next party congress will determine how Xi Xiping balances the political need to maintain GDP growth and the economic need to realign Chinas economy from reliance on an unsustainable property and infrastructure sector.

You are mis-representing. President Xi has on many occasions said that he wants to DELEVERAGE the Chinese economy from the Chinese Property because these people are speculators.

 

[patero]

Give it another few days dude and see what happens.


You are mis-representing. President Xi has on many occasions said that he wants to DELEVERAGE the Chinese economy from the Chinese Property because these people are speculators.

What exactly am I mis-representing? And what do you think will happen in a few days? You are the one demonstrating an absence of financial literacy, why do you think that $305 billion of Evergrande liabilities are owed entirely to foreign investors?

 

[Hamartia Antidote]

you keep posting this Evergrande thing for last 6 months

Um..no my first Evergrande post was in September.

Search results for query: Evergrande

Maybe instead it's just you making stuff up...

 

[patero]

Um..no my first Evergrande post was in September.

Search results for query: Evergrande

Maybe instead you just keep lying...

And this story is only going to get bigger, we'll be talking about it for the next six months or more. It's not just about Evergrande but the state of the entirety of the Chinese property, construction and related industries. We are seeing the first signs of a US$62 trillion property bubble start to deflate (at best) or burst.

It's going to have flow on effects for property markets around the world as well as global financial markets. Home sales in China have already plummeted 35% over the last two months, if Evergrande and other distressed developers are forced to liquidate more assets to meet debt obligations house prices will simply tank. Its the speed at which this could happen that will determine its impact on the broader Chinese economy.

This is not a story to ignore and simply wish away as 'western lies'. Evergrande is a listed company on the Hong Kong stock exchange, and an issuer of bonds on international markets. The financial information is there for everybody to see.

 

[FuturePAF]

Give it another few days dude and see what happens.


You are mis-representing. President Xi has on many occasions said that he wants to DELEVERAGE the Chinese economy from the Chinese Property because these people are speculators.

Now might be the time, while China is deleveraging from its property market, it can organize to turn those loans in other countries into FDI investments; get ahead of Build Back Better World initiative, and get concessions to jump start modernization of friendly nations to build up larger alternative markets.

 

[Hamartia Antidote]

Secondly, most of Evergrandes 305$ billion in liabilities are either borrowings from Chinese banks and other lenders as well as trade payables (wages, contractors).

I wasn't going to say anything but everybody knows China only allows limited outside access to their markets. Anybody who thinks there is $300B of Evergrande bonds held by foreigners just doesn't understand the market. I believe the biggest exposure was UBS with $245M and Ashmore with $145M.

 

[patero]

I wasn't going to say anything but everybody knows China only allows limited outside access to their markets. Anybody who thinks there is $300B of Evergrande bonds held by foreigners just doesn't understand the market. I believe the biggest exposure was UBS with $245M and Ashmore with $145M.

Yeah, emerging market specialist funds have the most exposure, Vanguard and Blackrock too off the top of my head (can't remember specifics, I think Blackrock has around $400 million in Evergrande bonds). But by their nature high yield Chinese bonds are only a small part of the high risk portion of their portfolios. Blackrock in particular can afford the losses.

 

[Hamartia Antidote]

Yeah, emerging market specialist funds have the most exposure, Vanguard and Blackrock too off the top of my head (can't remember specifics, I think Blackrock has around $400 million in Evergrande bonds). But by their nature high yield Chinese bonds are only a small part of the high risk portion of their portfolios. Blackrock in particular can afford the losses.

Some companies are intentionally loading up for a possible vulture outcome. They can afford the risk.

 

[patero]

Some companies are intentionally loading up for a possible vulture outcome. They can afford the risk.

That's fascinating. I'm not into trading myself, but I follow some hedge fund guys (Patrick Boyle, Kyle Bass etc) and some analysts and keep an eye on the markets but I invest everything back into my own business. There always seems to be a way for savvy traders to turn a profit from any situation.