Jinke Property seeks payment extension on 1.24 billion yuan of onshore bond to avert default
Jinke Property Group is seeking to extend the payment deadline of its 1.25 billion yuan (US$188 million) onshore bond to avert a default, as the Chinese government's policy easing on the real estate sector was too late to have any material impact on its overall business.
The developer asked creditors to extend the payment date on its 1.25 billion yuan principal and the 5 per cent coupon after investors exercised their put option, which requires Jinke to pay by May 28. The vast majority of the bondholders, with 1.24 billion yuan of the face value of the 1.25 billion yuan issue, exercised the put option.
"Given the balance sheet situation, cash collections from sales and liabilities, we hope to extend this bond for one year to have the time to recover our cash flow," said Song Ke, Jinke's vice-president and financial manager during an investors' call.
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Jinke's debt crisis highlighted the ongoing struggles of home builders in the world's largest property market despite recent policy easing, as sluggish sales and Covid-19 lockdowns are clouding the industry's outlook. Sunac China Holdings, one of the largest developers in China, missed paying the coupon on two dollar bonds.
Unfinished residential buildings are pictured at the Evergrande Oasis, a housing complex developed by Evergrande Group, in the Henan provincial city of Luoyang on September 15, 2021. Photo: Reuters. alt=Unfinished residential buildings are pictured at the Evergrande Oasis, a housing complex developed by Evergrande Group, in the Henan provincial city of Luoyang on September 15, 2021. Photo: Reuters.>
China's prices of new homes fell for the first time in seven years in April, while the prices of lived-in homes declined for the eighth consecutive month. Authorities have ramped up measures to revive the market, as the central bank on Friday slashed the five-year loan prime rate (LPR) - reference for home mortgages - by a bigger-than-expected 15 basis points.
Jinke's stock shed 7.3 per cent to 3.43 yuan in Shenzhen. The trading of its property management arm Jinke Smart Services Group halted on Monday "pending the release of an announcement."
Its 696 million-yuan outstanding onshore bond due July 8, 2022 was indicated at 66.989 cents on the dollar on Monday, from 84.2456 cents on a dollar on Friday, according to Bloomberg data.
Jinke will pay the interest for the bond on May 28, and pay 10 per cent of the principal immediately after the extension agreement, company executives said. It will pay another 5 per cent respectively at the end of July and August.
That will allow the company to pay off 20 per cent of the total amount in the three months, and then will pay 5 per cent, 5 per cent and 70 per cent in the following quarters.
"If the extension can't be agreed to, this bond will default, and [lead to] cause cross-defaults of some other outstanding bonds, so the company may have to go through an overall debt restructuring," said Liu Shaojun, accounting manager at Jinke.
S&P Global Ratings downgraded Jinke's long-term issuer credit rating further into junk on Monday to B- from B+, and withdrew the issuer credit rating and issue rating at the company's request.
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