The Evergrande crisis is spreading. Here are other Chinese property developers that are in default or wobbling.
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- China's Evergrande crisis is spreading to the rest of the property sector, with numerous companies defaulting.
- Fantasia, Sinic and China Properties Group are among the other developers to have failed to meet payments.
- Economists worry that contagion in the property sector could knock out a key engine of Chinese growth.
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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.
FantasiaSouth China Morning Post/Getty
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 HoldingsChina News Service/Getty Images
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 GroupSouth China Morning Post/Getty
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 LandZhang Peng/Getty
Modern Land failed to pay back a $250 million bond that came due on Monday, making it the latest Chinese real-estate giant to miss a critical debt deadline.
The missed payment was caused by "factors including the macroeconomic environment, the real-estate industry environment, and the COVID-19 pandemic," Modern Land said in a press release.
The company asked earlier in October to delay the repayment for three months, saying it aimed 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 later in the month. It said in an October 20 filing it is facing liquidity problems and is seeking to hire financial advisers.
It's not yet clear whether the company has formally defaulted on the debt. Research firms including OANDA and Lucror Analytics called the missed payment a default, but Modern Land didn't specify whether it was a default or the start of a cross-default with its other debts.
Modern Land tried divestitures, additional borrowing, and help from strategic advisors to stave off the debt problems, Bloomberg reported. The company's chairman and president had also said he and the company would contribute nearly $124 million to pay off shareholder loans.
Xinyuan Real EstateJohannes Eisele/Getty Images
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."
Greenland Holding GroupSTR/Getty Images
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.
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