China property crisis deepens as Sino-Ocean suspends offshore debt payments - The Straits Times

HONG KONG - Chinese state-linked developer Sino-Ocean Group Holding has suspended payment on all its offshore debts, citing tight liquidity as the nation’s property debt crisis deepens.

The country’s 25th-largest builder “is fully committed to formulating a viable holistic restructuring of its offshore debts”, Sino-Ocean said in a statement to the Hong Kong stock exchange on Friday.

Trading in eight of its US dollar bonds will be suspended until further notice.

The Beijing-based company owns more than 290 property projects across China and is among the top home sellers in Beijing and Tianjin, according to its 2022 annual report.

It has appointed Houlihan Lokey (China) as financial adviser and Sidley Austin as legal adviser.

“In response to mounting liquidity pressures, the Group has been in active dialogues with its creditors and endeavoured to proactively manage its liabilities,” Sino-Ocean said in the filing.

It added that in 2023, the company “experienced a rapid decline in contracted sales and increased uncertainty in asset disposals and has continuously faced limitations in various financing activities”.

Sino-Ocean has been one of the biggest sources of angst in China’s credit market the past several months.

Dollar bond prices have slumped amid mounting concerns that even property companies with state links are not immune from a sector debt crisis that has sparked record defaults.

Once one of the stronger names among the country’s debt-laden developers, its struggles have been a sign of the sector’s ongoing liquidity constraints.

That has been amplified recently by the payment struggles at Country Garden Holdings, which in 2023 lost its title as China’s largest builder by sales.

Since it was founded in 1993, Sino-Ocean has expanded into a range of operations, including property services, logistics and asset management.

In August, Sino-Ocean won bond holder approval to extend a combined US$50.2 million ($68 million) of interest payments for three dollar notes by two months.

A unit two weeks ago received creditor clearance to stretch repayment of a 2 billion yuan (S$379 million) local note through August 2024 after having lost an initial vote regarding such an extension.

On Thursday, the Credit Derivatives Determinations Committee said it had ruled that Sino-Ocean’s missed payment on dollar debt due 2024 was a failure-to-pay credit event, triggering credit default swaps.

Sino-Ocean’s largest shareholder is state-owned China Life Insurance, which held a nearly 30 per cent stake in the Hong Kong-listed company, according to data compiled by Bloomberg.

Having a nearly equal stake is Dajia Insurance Group, which took over most of the operations of China’s Anbang Insurance Group and has been controlled by a state-run bailout fund.

The builder’s shares have fallen 39 per cent in 2023 to record lows.

They did surge a record 82 per cent on Monday as a Sino-Ocean affiliate won a 90-day grace period if any event of default occurs involving a yuan note on which a payment extension was sought. BLOOMBERG

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