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China Developers Confront a $197 Billion Challenge in January

China Developers Confront a $197 Billion Challenge in January

China’s property developers have mounting bills to pay in January and shrinking options to raise necessary funds.

The industry will need to find at least $197 billion to cover maturing bonds, coupons, trust products and deferred wages to millions of migrant workers, according to Bloomberg calculations and analyst estimates. Beijing has urged builders like China Evergrande Group to meet payrolls by month-end in order to avoid the risk of social unrest.

Policy for the property market remains tight even after China in December pivoted toward supporting economic growth. Future focus is likely to be on ensuring homes are delivered, and the country’s central bank is encouraging financial firms to help acquisition activity in the real estate sector. Bond payments for stressed firms are larger this month than November and December combined.

China Developers Confront a $197 Billion Challenge in January

Calculations of January’s bill include:

  • Worker wages: 1.1 trillion yuan ($173 billion), estimate according to Nomura Holdings Inc. economists
  • Dollar bonds: $6.04 billion in principal payments and $1.7 billion in coupons, according to data compiled by Bloomberg
  • Onshore notes: 37.2 billion yuan in principal payments and 6.6 billion yuan in coupons, Bloomberg-compiled data show
  • Trust products: 60.2 billion yuan come due, according to data tracker Use Trust
  • There’s also interest payments on local and offshore bonds, bills to suppliers and potential hidden debt

For smaller or struggling firms it’s unclear where the cash will come from. Yields have been so elevated offshore that the dollar bond market remains effectively shut for refinancing, a situation that HSBC Holdings Plc analysts predict will continue for at least another six months. Only a handful of the strongest private-sector builders have recently tapped the interbank credit market onshore, while low stock valuations limit the scope for equity financing. 

China Developers Confront a $197 Billion Challenge in January

Generating higher revenue from a weakening property market remains a challenge. Also, companies like Evergrande have struggled to sell non-core assets. 

Bond Bills for Stressed Developers - $5.6 billion

For builders whose debt had the worst 2021 returns in a Bloomberg index of China high-yield dollar bonds, below is a week-by-week calendar for interest and principal payments due on local and offshore notes. Some payments may have grace periods unless otherwise stated.

Note: While the list excludes firms which defaulted last year, it includes Evergrande and Kaisa Group Holdings Ltd. The developers have said they are in negotiations with bondholders but are yet to clarify their plans for future payments.

Evergrande, Kaisa - $1.66 billion including puttable bond

  • Evergrande 4.5 billion yuan note due 2023 is puttable Jan. 8; also first deadline for 314.1 million yuan coupon
  • Kaisa $26.25 million coupon on note due 2025, first deadline Jan. 15
  • Evergrande $57.5 million coupon on note due 2023, first deadline Jan. 22
  • Evergrande $60 million coupon on note due 2024, first deadline Jan. 22
  • Kaisa $8.65 million coupon on note due July, first deadline Jan. 22
  • Kaisa $40.8 million coupon on note due 2023, first deadline Jan. 23
  • Kaisa $24.9 million coupon on note due 2025, first deadline Jan. 23
  • Evergrande unit Scenery Journey $115 million coupon on note due October, first deadline Jan. 24
  • Scenery Journey $120 million coupon on note due 2023, first deadline Jan. 24
  • Evergrande $50.4 million coupon on note due 2023, grace period ends Jan. 27
  • Evergrande $204.8 million coupon on note due 2025, grace period ends Jan. 27
  • Kaisa $105.35 million coupon on note due 2024, grace period ends Jan. 29
  • Kaisa $48.75 million coupon on note due 2022, grace period ends Jan. 29
  • Kaisa $40.25 million coupon on note due 2023, first deadline Jan. 30

Week 1 (Jan. 1-7) - $234 million

  • Agile $14.4 million coupon on note due 2025, first deadline Jan. 2
  • Zhenro 57.5 million yuan coupon on note due June, first deadline Jan. 2 (spokesperson said payment will be made on time)
  • Logan $61.8 million note due Jan. 3, plus $1.78 million in interest
  • Guangzhou R&F 297.5 million yuan coupon on note due 2023, first deadline Jan. 3
  • Shimao $23.75 million coupon on note due July, first deadline Jan. 3
  • Redco 31.8 million yuan coupon on note due 2023, first deadline Jan. 6
  • Logan $7.05 million coupon on note due 2026, first deadline Jan. 6
  • Seazen 310 million yuan note due Jan. 7, plus 17.05 million yuan in interest
  • Zhenro $13 million coupon on note due 2026, first deadline Jan. 7

Week 2 (Jan. 8-14) - $1.42 billion

  • Times China $18.6 million coupon on note due 2025, first deadline Jan. 8
  • Shenzhen Logan 48 million yuan coupon on note due 2025, first deadline Jan. 8
  • Shanghai Shimao 20.6 million yuan coupon on note due 2023, first deadline Jan. 9
  • Sunac $19.5 million coupon on note due 2023, first deadline Jan. 9
  • Sunac $21 million coupon on note due 2025, first deadline Jan. 9
  • Sunac $24.1 million coupon on note due 2025, first deadline Jan. 10
  • KWG $250 million note due Jan. 11, plus $7.5 million in interest
  • Yango Justice $24.7 million note due Jan. 11, plus $650,000 in interest
  • Shimao $15 million coupon on note due 2031, first deadline Jan. 11
  • Guangzhou R&F unit Easy Tactic $18.3 million coupon on note due 2024, first deadline Jan. 11
  • Shanghai Powerlong 66 million yuan coupon on note due 2026, first deadline Jan. 11
  • Logan $9.56 million coupon on note due 2025, first deadline Jan. 12
  • Easy Tactic $725 million note due Jan. 13, plus $20.8 million in interest (extension proposed)
  • Zhenro unit ZhenAn Glory $100 million note due Jan. 13, plus $2.6 million in interest
  • Shimao $6.9 million coupon on note due 2030 first deadline Jan. 13
  • Greentown $8.48 million coupon on note due 2025, first deadline Jan. 13
  • Greentown 98 million yuan coupon on note due 2026, first deadline Jan. 13
  • Logan $6.75 million coupon on note due 2028, first deadline Jan. 13
  • Redsun $12.8 million coupon on note due 2025, first deadline Jan. 13
  • Seazen Group $6.68 million coupon on note due 2025, first deadline Jan. 13
  • KWG $11.1 million coupon on note due 2027, first deadline Jan. 13
  • Yuzhou $23.8 million coupon on note due 2026, first deadline Jan. 13
  • Yuzhou $17.8 million coupon on note due 2027, first deadline Jan. 13
  • Central China $9.75 million coupon on note due 2025, first deadline Jan. 14
  • Logan $8.63 million coupon on note due 2025, first deadline Jan. 14
  • Times China $10.1 million coupon on note due 2027, first deadline Jan. 14

Week 3 (Jan. 15-21) - $831 million

  • Shanghai Shimao 2 billion yuan note due Jan. 15, plus 93 million yuan in interest
  • Shimao $28 million coupon on note due 2026, first deadline Jan. 15
  • Yango Justice $13.9 million coupon on note due 2023, first deadline Jan. 15
  • Yango Justice $13.4 million coupon on note due 2024, first deadline Jan. 15
  • Seazen unit New Metro Global $6.94 million coupon on note due 2025, first deadline Jan. 15
  • Shimao $13 million coupon on note due 2027, first deadline Jan. 16
  • Logan $13 million coupon on note due 2023, first deadline Jan. 16
  • Redsun $22.1 million coupon on note due 2023, first deadline Jan. 16
  • Times China $16.9 million coupon on note due 2023, first deadline Jan. 16
  • Central China $7.25 million coupon on note due 2024, first deadline Jan. 16
  • Shanghai Shimao 22.5 million yuan coupon on note due 2023, first deadline Jan. 19
  • Sunac 107.4 million yuan coupon on note due 2025, first deadline Jan. 19
  • China Aoyuan $188 million note due Jan. 20, plus $3.93 million in interest
  • Shanghai Powerlong has said it will pay 930 million yuan Jan 20. to meet put option on 2025 note; 62 million yuan coupon also due

Week 4 (Jan. 22-31) - $1.46 billion

  • Ronshine $18.6 million coupon on note due 2023, first deadline Jan. 22
  • Yango Group 69 million yuan coupon on note due 2026, first deadline Jan. 22
  • Sunac 37.5 million yuan coupon on note due 2023, first deadline Jan. 22
  • Greentown 19.9 million yuan coupon on note due 2024, first deadline Jan. 22
  • China Aoyuan $500 million note due Jan. 23, plus $21.25 million in interest
  • Yuzhou $242.1 million note due Jan. 23, plus $10.4 million in interest
  • Powerlong $14.6 million coupon on note due 2023, first deadline Jan. 23
  • Greentown has said it’ll pay 495 million yuan on Jan. 24 to meet put option on 2024 note
  • Yuzhou $347.45 million note due Jan. 25, plus $10.4 million in interest
  • Ronshine $10.65 million coupon on note due 2025, first deadline Jan. 25
  • Powerlong HK$1 billion ($128.2 million) note due Jan. 26, plus HK$30 million in interest
  • Powerlong $4 million coupon on note due July, first deadline Jan. 26
  • Sunac $19.5 million coupon on note due 2026, first deadline Jan. 26
  • Easy Tactic $13.1 million coupon on note due July, first deadline Jan. 28
  • Yango Group 40.1 million yuan coupon on note due 2025, first deadline Jan. 29
  • Shimao $13 million coupon on note due 2025, first deadline Jan. 30

©2022 Bloomberg L.P.