Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Delinquent Shimao, Kaisa units named and shamed as defaults rise

Stock MarketsJan 12, 2022 01:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Reuters. FILE PHOTO: A worker for recycling electric equipment rides past residential buildings in Beijing, China December 2, 2021. REUTERS/Tingshu Wang 2/2

SHANGHAI (Reuters) -Property firms controlled by developers Shimao Group Holdings, Kaisa Group Holdings and Greenland Group have been named and shamed in a list of Chinese companies "consistently overdue" on commercial paper payments.

The total number of such delinquent firms jumped 26% in December from the previous month, according to the list published by the Shanghai Commercial Paper Exchange.

The spike in defaults on commercial paper - a popular short-term debt instrument that Chinese developers use to delay payment to suppliers - shows sustained liquidity stress in the real estate sector despite some policy easing.

The list also contains an increasing number of defaults by construction material suppliers and decoration companies, suggesting developers' debt troubles could be spreading.

A total of 484 companies were overdue on at least three commercial paper payments during the Aug. 1 to Dec. 31 period, according to the list, published on the exchange's website.

The December total was 100 more companies than in November and included 95 in the real estate sector, or nearly one-fifth of the total.

Four of the names are project companies of developer Shimao Group, which is discussing payment arrangements with creditors after announcing a default on a trust loan last week.

The list, which does not disclose financial figures, also includes real estate firms controlled by Kaisa Group, which is also struggling to repay investors, according to an analysis of the firms by Reuters.

Companies controlled by Greenland, Risesun Real Estate Development Co, China Grand Enterprises (CGE), Zoina Group and Seedland are also on the list.

Shimao and Kaisa did not immediately respond to requests for comment and Greenland declined to comment. Risesun, Zoina, Seedland and CGE could not be reached for comment.

China's CSI 300 Real Index retreated 1% on Wednesday morning after dropping as much as 3.2%, while the Hang Seng Mainland Properties Index lost 1.4%.

Property bond performance was mixed, with a Shimao bond slumping 18% in Shanghai.

China's commercial paper market came under renewed scrutiny in 2021 with regulators demanding greater disclosure as part of efforts to rein in ballooning debt in the property sector.

Commercial paper, which is not counted as interest-bearing debt, increasingly became a source of funding for developers locked out of other financing channels.

China Evergrande Group, the world's most indebted developer struggling amid a debt crisis, owes more than 200 billion yuan ($31.42 billion) in commercial paper.

($1 = 6.3644 Chinese yuan)

Delinquent Shimao, Kaisa units named and shamed as defaults rise
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
Chad RicherThanYou
Chad RicherThanYou Jan 11, 2022 10:23PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The US is next to see waves of defaults and bankruptcies
MS MS
MS MS Jan 11, 2022 10:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What would be valued is if we had a comparable, say the US? Can we get this data?
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email