Xinyuan adds to signs of China property distress as debt exchange garners insufficient support before Friday’s repayment deadline

Name: Unpaid by Evergrande, supplier sells car and home to rescue his business
Uploaded: 2021-10-11T06:10:24.000Z
Duration: 2 min 25 s
Description: Unpaid by Evergrande, supplier sells car and home to rescue his business

Xinyuan extends the closing date to its bond exchange offer by 24 hours to garner more support from creditors

Company dangles carrots to swap US$229 million of notes due on October 15 with new bonds due in 2023

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China’s ‘three red lines’ policy to rein in debt in the real estate sector has sent many developers into a tailspin. Photo: Xinhua

SCMP Reporter

Published: 2:10pm, 11 Oct 2021Updated: 8:10pm, 11 Oct 2021

Xinyuan Real Estate is facing a critical week in its effort to delay a bond repayment, after the Chinese developer extended the closing date for its bond exchange offer by 24 hours to solicit more support from offshore creditors.

The New York-listed developer said its offer to swap a US$229 million junk-rated bond maturing on October 15 into new bonds due in 2023 has only garnered 61.18 per cent acceptance as of October 8, according to an exchange filing on Monday. The debt swap requires no less than 90 per cent to succeed.

Xinyuan has now delayed the closing date to 4pm London time on October 13, a full day later than its previously announced deadline. The offer also requires bondholders to waive several default clauses and other obligations at the same time.

The Beijing-based developer has warned that failure to reach the 90 per cent threshold could push the company into potential default, saying it may not be able to repay bond upon maturity on Friday and “may need to explore an alternative debt restructuring exercise,” it said in the filing.

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Unpaid by Evergrande, supplier sells car and home to rescue his business

China’s “three red lines” to curb industry leverage and systemic risk has now shut China Evergrande, Fantasia Holdings and several highly indebted peers out of the loan and bond market, with several lurching into default. Authorities have maintained silence even as Evergrande cratered under more than US$305 billion of liabilities.

Evergrande has hired outside advisers to assess its debt load, having missed two deadlines to service its dollar bonds last month. Xinyuan is not alone as the new week brought more signs of financial distress in the industry to the surface.