China Developer Greenland Seen Deferring $488m Bond Debt

Greenland Holdings could become the first state-backed construction giant in China to defer a large offshore bond debt in coming weeks.

The Shanghai-based developer, which has high-profile projects around the world, said on Friday it plans to defer repayment of a $488 million offshore bond maturing in June by one year, according to sources who attended an investor call.

Many private developers have offered bond exchanges to ease their liquidity pressures, while several like China Evergrande and Sunac China have defaulted on payments.

But Greenland, which has been in dire financial straits since late last year, would be the first state-backed developer to extend a dollar bond payment since the property sector plunged into a major crisis last year.

Greenland issued a filing early on Friday saying it will seek the approval from holders of the June notes to extend the repayment, citing the impact from the Covid-19 lockdown in Shanghai. But the group did not provide any details in the filing.

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Plan For Asset Sales

In the investor call, Greenland said it would pay 10% of the principal amount and all the interest on June 25, 2022, the maturity date, while the remaining amount would be paid one year later in 2023.

Meanwhile, the developer said it was “fully capable” of repaying three other bond tranches due later this year on time, as the June payment was only affected by cashflow disruptions due to lockdowns since March.

Greenland could not be immediately reached for comment.

The company’s sales in April dropped 57% from a year earlier and sales this month would continue to see a big fall, Wu Zhengkui, general manager of Greenland’s finance department told the call.

He said the firm plans to sell 50-70 billion yuan ($7.5-$10.4 billion) of assets including office towers and hotels within three years to improve its liquidity.

• Reuters with additional editing by Jim Pollard