This Year Chinese Companies' Dollar Bond Defaults Reach $8.7 Billion, 'Record High'

Real Estate Companies Default One After Another Due to Evergrande Group Crisis

[Image source= Bloomberg]

[Asia Economy Reporter Park Byung-hee] Due to the credit crunch in the Chinese real estate market, the scale of dollar bond defaults by Chinese companies this year has reached an all-time high.

According to Bloomberg on the 26th (local time), the scale of dollar bond defaults by Chinese companies this year was recorded at $8.72 billion. This has already surpassed last year's annual default scale of $8.27 billion and is more than double the $3.87 billion recorded in 2019.

One-third of this year's defaulted bonds are related to real estate companies.

As Chinese authorities imposed regulations on excessive borrowing by real estate companies and the liquidity crisis of Hengda Group, the second-largest real estate developer, overlapped, it has become difficult for real estate companies to secure funds, leading to an increase in cases where they fail to repay principal and interest on bonds.

On the 25th, Modern Land China (Chinese name Dangdai Zhiye·當代置業) also failed to repay $250 million in principal and interest on dollar bonds.

Hengda Group failed to repay $83.5 million in dollar bond interest on September 23. Hengda Group overcame the default crisis by repaying $83.5 million just before the end of the one-month grace period. However, the liquidity crisis of Hengda Group is expected to continue, as it must repay another $45.2 million in interest on the 29th.

Credit rating agencies have been consecutively downgrading the credit ratings of Chinese real estate companies. The number of Chinese real estate companies with downgraded credit ratings has recorded an all-time high for two consecutive months. In September, 34 companies were downgraded, and as of October 21, 44 companies have already been downgraded. Until July, the number of downgraded companies was less than 10 per month, but the number has significantly increased in the third quarter following the liquidity crisis of Hengda Group.

This content was produced with the assistance of AI translation services.