Sino-Ocean Group Holding Ltd. is seeking investor approval to extend three dollar-note coupons by two months, as the state-backed Chinese builder faces deadlines to make other bond payments and avoid its first public-debt delinquency.
(Bloomberg) — Sino-Ocean Group Holding Ltd. is seeking investor approval to extend three dollar-note coupons by two months, as the state-backed Chinese builder faces deadlines to make other bond payments and avoid its first public-debt delinquency.
The company announced consent solicitations have been launched for the payment-extension proposals and related default waivers in Wednesday night filings with Hong Kong’s stock exchange. The coupons’ initial due days are from July 30 through Aug. 5 and a combined $50.2 million is owned, according to data compiled by Bloomberg. Many Sino-Ocean notes have 14-day grace periods for interest payments.
The requests, on which bondholders can vote through Aug. 11, were made as a grace period for Sino-Ocean to pay $7.02 million of interest on a separate dollar note was coming to an end. Some investors said they were told Thursday that funds were remitted for that coupon, and that Sino-Ocean plans on Friday to pay the interest due on a second note whose grace period ends that same day. Those coupons were the first of about $380 million of bond obligations the company faced this quarter.
The developer’s strains are a reminder of the ongoing liquidity constraints in the property sector as new-home sales have resumed falling and new defaulters have emerged. Signals of new property-sector support this week stoked big gains for some property firms’ stocks and bonds, yet no broad stimulus has emerged as China’s economic momentum slows.
Sino-Ocean, China’s 25th-largest builder by contracted sales, hasn’t defaulted on a public-note obligation like several fellow state-backed peers have. Some of its dollar bonds posted record declines earlier in July as Sino-Ocean told some creditors it was working with two major shareholders regarding its debt load. The firm’s notes are indicated at 12 cents on the dollar or less, according to prices compiled by Bloomberg.
The developer proposing to extend the $50 million of coupon payments initially due next week “might be too little, too late,” according to Bloomberg Intelligence credit analysts Daniel Fan and Adrian Sim. They wrote Thursday that Sino-Ocean has $800 million of loans due in September that are unlikely to be refinanced again following a June extension.
As onshore lenders appear to have turned more risk-adverse regarding builders, “support to quasi-SOE names such as Sino-Ocean has also been somewhat limited,” JPMorgan Chase credit analyst Frank Pan said in a report.
Sino-Ocean also has a 2 billion yuan ($280 million) local note that is scheduled to mature Aug. 2. The firm has proposed stretching out repayment over the next year and warned it will default on the payment if the request isn’t approved by the bond’s holders.
The builder disclosed this week that attempts to raise cash this month have failed while available funds on its books have been “nearly used up.” Liquidity hasn’t improved as expected for reasons including renewed weakness in new-home sales nationally and the pace the firm has launched new projects, according to a Sino-Ocean exchange filing Tuesday.
–With assistance from Emma Dong.
(Updates throughout.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.