Sinic becomes another potential China developer in trouble

SHANGHAI, 12 Oct 2021:

Chinese real estate firm Sinic Holdings became the latest company in the sector to announce a default on payment of its offshore bonds for lack of liquidity.

In a statement to the Hong Kong Stock Exchange last night, Sinic explained that on Oct 18, the company was due to make a payment, including interest, for offshore bonds worth US$250 million and a yield of 9.5%.

“The company currently anticipates that it will not have enough financial resources to make payments of the principal and the last instalment of interest on the 2021 bonds on the maturity date.”

On Sept 20, trading in Sinic stocks were halted in the Hong Kong stock exchange after its shares crashed by 87%.

The company reported that a creditor had demanded payment of US$75 million because two days earlier, Sinic had not paid about 38.7 million yuan (US$6 million) in interest on two onshore debt packages.

This involved the activation of a clause whereby investors of three groups of Sinic offshore bonds valued at a total of US$710 million may demand to recover the amounts immediately.

For the time being, Sinic – which has some US$1 billion in debt issued through offshore bonds – claims its creditors have not yet taken action on this issue and that there is an ongoing discussion with them to reach an agreement that suits both parties.

On Oct 4, debt rating agency Fitch downgraded Sinic to Level C, used for companies that are close to defaulting on their debt obligations.