BEIJING: China’s unprecedented property crisis has just reached another flashpoint, as one of the country’s biggest local-government owned conglomerates struggles with debt payments.
Based in the southern province of Guangdong, Zhuhai Huafa Group Co missed payments on two trust products that were due recently, people familiar with the matter said on Monday.
The firm, which has helped build landmarks such as the 330m tall Zhuhai Tower skyscraper, has also been asking to extend loans from at least three banks.
That makes it the largest company heavily reliant on the property sector to try pushing back debt payments since China Vanke Co, once the country’s biggest developer, took similar steps about a year ago.
The development underscores how China’s years-long real estate debt woes are still spreading despite recent signs of stabilisation in the housing market.
Huafa has developed over 200 residential projects across China.
The conglomerate had 413 billion yuan (US$61.9bil) of interest-bearing liabilities, including bank and trust loans as well as bonds, as of March, according to a company document this month.
“Huafa is facing the same challenges as other Chinese developers, but it also plays such a crucial role in the local economy that local governments are highly likely to step in and support it,” said Yao Yu, chief executive officer and founder of credit research firm RatingDog.
“The eventual repayment outlook of Huafa’s bonds is not overly pessimistic.” — Bloomberg
