Sunac can’t rule out 2nd offshore debt overhaul

Defaulted property developer Sunac China Holdings said it can’t rule out a second offshore debt restructuring as a prolonged property crisis dims its outlook and it faces another court petition to wind up operations.

The company “doesn’t exclude seeking a more comprehensive holistic offshore debt solution”, given that current market conditions are “significantly below” expectations when it completed its first overhaul in 2023.

The development signals renewed financial stress for the Chinese developer, which first defaulted on a US dollar bond in 2022 as the country’s housing crisis escalated. Investors have grown increasingly anxious about upcoming interest payments amid sluggish sales, which sent its shares and US dollar notes to their lowest levels in months last week.

Sunac said in the statement that it may not be able to pay some offshore debt if the wind-up petition is successful. The developer said it will oppose the petition “vigorously”.

“The petition may prompt other creditors of the group to demand acceleration of payment,” Sunac said. “The company expects that it will not be able to meet other offshore payment obligations when due or within the relevant grace periods.”

China’s private-sector developers have yet to escape a years-long downturn in the property market as sales of new homes remain weak even after a series of government stimulus measures. Country Garden Holdings, which for several years was China’s largest developer by sales, on Thursday said that it proposed new terms with key banks to slash debt by as much as US$11.6 billion and extend maturities by up to 11.5 years.

Sunac became one of China’s first distressed developers to restructure its offshore debt about a year and half after defaulting on a US dollar bond, fuelling optimism that such deals can be done.

Sunac is trying to carry out a separate deal to restructure about 15.5 billion yuan (S$2.9 billion) of onshore bonds, aiming to cut its yuan-denominated debt by more than half.

The wind-up petition represents a fresh headwind. The request is related to its non-repayment on a US$30 million loan it guaranteed, and was filed by China Cinda HK Asset Management. A hearing is scheduled for Mar 19, according to the statement. BLOOMBERG

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