Shimao group , a Chinese property developer, missed its interest and principal payment on a US$1bn offshore bond due Sunday in the latest blow to China's property market.
This was the Shanghai-based developer's first missed public offshore payment, with the firm reportedly holding US$6.1bn in outstanding international bonds, making it the sixth-largest Chinese developer issuer.
There have been a number of defaults on China's offshore debt obligations, highlighted by China Evergrande group, once the country's top-selling developer but now the world's most indebted property company.
Reports indicate among the top five issuers, three defaulted on their dollar bonds - Evergrande, Kaisa Group, and Sunac China.
Shimao cited "market uncertainties over debt refinancing" and "challenging operating and funding conditions" as reasons why it was unable to pay US$1.02bn in principal and interest to creditors of 4.75% senior notes, even as it has not paid other offshore indebtedness.
The company said it has not received any notice from its lenders of acceleration of repayment, suggesting debt holders have not taken enforcement action.
A breather has reportedly been granted by creditors of the Chinese developer's two syndicated loans where HSBC Holdings PLC (LSE:HSBA) acted as lead facilitator for the loans agreed upon in 2018 and 2019.
As stated in the filing, Shimao's creditors are willing to allow the company to continue to operate the business with minimum disruption while exploring the possibility of an agreement and implementation of a possible restructuring with relevant stakeholders.
In order to raise funds, Shimao has been extending its debt obligations onshore and disposing of assetsand said contracted sales in the first five months declined 72% from a year ago.