Fantasia, Cynic China Real Estate Default Risk in Evergrande Crisis

Pedestrians cross the road in front of houses in Beijing, China.

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Followed by Evergrande Debt crisis, signs of stress on China’s real estate market, are rising after a developer neglected to pay bonds on Tuesday.

Rating agencies downgraded Chinese developers Fantasia Holdings When Cynic Holdings Beyond the risks from their tense cash flow situation.

Fantasia did not repay the bonds that matured on Monday, said in a filing with the Hong Kong Stock Exchange.

The company said it has suspended trading of its shares since September 9 until further notice. These shares have plummeted by nearly 60% since the beginning of the year.

Evergrande transmission fear

However, the fallout from Fantasia will be much smaller than the Evergrande.

Evergrande is the world’s most debt-rich real estate developer with $ 300 billion in debt, with Fantasia’s total debt totaling $ 82.9 billion ($ 12.8 billion), according to first-half financial statements.

We believe that the presence of these bonds means that our liquidity situation may be more severe than previously expected.

Fitch Ratings said Monday that it had downgraded Fantasia from “B” to “CCC-” and said the company’s cash flow situation “could be more severe than previously expected.” According to its website, “CCC” means “substantial credit risk” with a default “real potential”. A “B” rating means that there is a significant default risk, but the safety margin is limited.

Fitch emphasized the existence of private bonds not disclosed in the company’s financial reports in a report released before the company filed Monday night, and Fantasia delayed payments of $ 100 million for the bonds. Said that.

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Industry watchers have been concerned about fallout and possible transmissions from the evergrande crisis that will hurt China’s growth. Analysts estimate that China’s real estate sector accounts for 15% of the gross domestic product of Asian giants.

Many Asian high yield bond funds are also dominated by Chinese real estate developers.

Cynics are likely to default

Tuesday morning S & P Global Ratings downgraded Cynic Holdings from “CCC +” to “CC”.

According to the agency’s website, “CCC” means that the company is currently vulnerable and relies on favorable business, financial and financial conditions to meet its financial commitment. “CC” means that the company is very vulnerable. The default hasn’t happened yet, but it’s expected to be virtually certain.

“We have downgraded the rating because we believe Cynic is facing a serious liquidity problem and its debt repayment capacity is almost exhausted,” S & P said.

Rating agencies said they hope Chinese developers will default to $ 246 million in offshore dollar-denominated bonds by October 18. .18, S & P said.

Sinic’s total debt is $ 14.2 billion, as shown in its first half financial statements. Shares of Chinese real estate developers have been suspended since September 20th.

Fantasia, Cynic China Real Estate Default Risk in Evergrande Crisis

Source link Fantasia, Cynic China Real Estate Default Risk in Evergrande Crisis

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