Developer China Fortune Defaults on Another $1.3 Billion in Debt
What’s new: Troubled property developer China Fortune Land Development Co. Ltd. (600340.SH) again defaulted on billions of yuan in debt as it struggled to scrape together enough cash to meet its commitments amid a tightening regulatory environment.
China Fortune said that it and its subsidiaries have recently failed to repay 8.38 billion yuan ($1.3 billion) in principal and interest on a mishmash of new debt, including bank loans, trust loans, bonds and other debt financing tools, according to a Wednesday filing (link in Chinese) to the Shanghai Stock Exchange.
The latest defaults add to the property developer’s already large pool of debt. As of Wednesday, China Fortune has defaulted on a total of 19.42 billion yuan in principal and interest, and it is negotiating with related financial institutions to possibly postpone repayment, it said in the filing.
The background: China Fortune said in the filing that the defaults have had a serious impact on its financing. It said that the defaults are due to the current economic and industry conditions coupled with the impact of the Covid-19 epidemic.
The defaults add to evidence of a brewing debt crisis among big Chinese property developers. Financial regulators introduced what became known as the “three red lines” policy in August in an effort to control surging debt levels among such firms, with a trial rolled out for the biggest developers.
In September, the government signaled that it would work to ensure that stimulus funds didn’t end up in the real estate market, and in December, regulators issued a new bank loan management mechanism to cap banks’ lending to the sector.
Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.
Guo Yingzhe contributed to this report.
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