Chinese Developer Fantasia Fails To Pay Off Debt, Real Estate News, ET RealEstate

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BEIJING: Another Chinese homebuilder has struggled financially after missing payments on its debts, adding to concerns about the country’s real estate sector as Chinese giant Evergrande is on the verge of collapse.

Fears of contagion across the Chinese economy have grown as Evergrande, the nation’s most indebted private homebuilder, struggles with more than $ 300 billion in liabilities and heads for massive restructuring.

Fantasia Holdings did not repay a $ 205.7 million note on Monday, the Shenzhen-based company said in a statement.

It came as property management company Country Garden Services Holdings said a unit of Fantasia failed to repay a 700 million yuan ($ 108 million) loan, saying it was likely the company would be lacking.

The news also comes as investors await news from Evergrande after it suspended trading in its shares on Monday pending an announcement of a “major deal,” reports indicating that Hong Kong real estate company Hopson Development Holdings planned to buy a 51% stake in its real estate services. arm.

While Fantasia is a smaller player in the market than Evergrande, its struggles highlight investor concerns over companies’ financial reporting.

On Tuesday, S&P Global Ratings downgraded Fantasia’s rating to “SD” or “selective default,” saying this highlighted its tight liquidity.

Just a day before, Fitch Ratings demoted Fantasia to “CCC-”, a move that indicates default is a possibility.

The rating agency added in a statement that although media reported that Fantasia missed an earlier payment to bondholders, the bond “does not appear to have been disclosed in the company’s financial reports.”

“We believe that the existence of these obligations means that the company’s liquidity situation could be more strained than expected.

“In addition, this incident casts doubt on the transparency of the company’s financial information,” added Fitch.

In addition, S&P downgraded another Chinese real estate company, Sinic Holdings, claiming that its “debt service capacity was almost exhausted”.

The company has been unable to repay the interest, which could result in “accelerated repayments of Sinic’s other debts,” S&P said on Monday.

Fitch demoted Sinic from “CCC” to “C” on Tuesday, reflecting his view that “a default-type process has started” for the company.

The Shanghai-based Sinic boss hit the headlines last month when he lost more than $ 1 billion in a market meltdown over fears over Evergrande.

Zhang Yuanlin saw his net worth drop from $ 1.3 billion to $ 250.7 million on September 20, according to Forbes, when his company was forced to shut down in Hong Kong following a slump. 87% of its share price.

China’s real estate sector has come under scrutiny in recent months, with regulators last year announcing caps on three different debt ratios under a program dubbed “three red lines.”

Beijing has been silent on Evergrande’s struggles, but state media followed various responses in a nod to the mood towards a private company that grew on a debt spree during the boom years of the Chinese real estate.

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