Exclusive: Chinese developers propose extension of offshore debt maturity, restructuring to regulators – sources


BEIJING / HONG KONG: Some Chinese real estate developers have told regulators they intend to extend the maturity of their offshore bonds or undertake debt restructuring, two sources familiar with the matter said, while a number Growing defaults are hitting the industry.

The developers proposed the ideas at a meeting held on Tuesday jointly by the National Development and Reform Commission (NDRC) and the State Exchange Administration (SAFE), the sources said.

It was not immediately clear which developers had raised these proposals and on what decision regulators were going to make.

Regulators, however, have asked developers facing a large offshore debt maturity to assess their repayment risks and report difficulties, the sources said, declining to be named due to the sensitivity of the matter.

The development highlights the frenzied behind-the-scenes efforts by indebted developers and Chinese regulators to contain the fallout focused on the ailing China Evergrande group, as concerns over the liquidity crunch in the real estate sector mount.

“Developers have been asked to report in detail on all their offshore bond repayment plans; they should indicate if there are any particular payments (for which) they are having repayment difficulties,” said one. sources.

The NDRC said in a statement Tuesday evening that regulators had asked corporations attending the meeting to optimize their foreign debt structures and proactively prepare for repayment of principal and interest on their foreign bonds.

They called on foreign debt issuers to use the funds for approved purposes and “jointly maintain their own reputation and general market order.”

Details of the meeting, including proposals from developers who attended the meeting, were not disclosed.

The meeting with regulators took place in Beijing on Tuesday amid default by developers Fantasia Holdings Group, Sinic Holdings and Modern Land on their dollar bonds maturing this month.

The liquidity crisis in China’s $ 5,000 billion real estate sector has been fueled in part by Evergrande, which is on the verge of collapse with more than $ 300 billion in debt and struggling to meet its payment obligations .

SAFE and NDRC did not respond to Reuters’ request for comment.

A total of eight developers, including Kaisa Group, Shimao and Sino-Ocean Group, attended the meeting on Tuesday, financial media Caixin reported on Wednesday.

China Vanke, Central China Real Estate and Oceanwide Holdings were also among the participants, the two sources, who have first-hand knowledge of the talks, told Reuters.

Vanke declined to comment. Kaisa confirmed her attendance at the meeting, without further details. Central China, Oceanwide, Shimao and Sino-Ocean Group did not respond to the request for comment.

(Reporting by Jing Xu in Beijing and Clare Jim in Hong Kong; editing by Sumeet Chatterjee & Shri Navaratnam)

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