Default on bond interest fuels 12.9% decline in Agile
Developer ‘unable to fulfil payment obligations under offshore debts’ due to liquidity pressure
Shares in Agile Group Holdings have slumped after the mainland developer failed to pay interest on an offshore bond, underscoring the sector’s lingering struggle with liquidity pressure despite Beijing’s supportive measures.
The stock fell by 12.9 per cent to 61 HK cents yesterday, its steepest decline in a week.
The Guangzhou-based developer said it was unable to service the coupon on a US$483 million bond maturing next year within the grace period that ended on Monday.
The company “will not be able to fulfil all payment obligations under its offshore debts” in light of the liquidity pressure, according to a filing to the Hong Kong stock exchange yesterday.
“The group has been making relentless efforts to minimise the impact [of the liquidity pressure] on its business operations and fulfil its debt payment obligations to the greatest extent,” Agile said, adding it would engage external financial and legal advisers to find solutions to its debt problems.
The firm has been struggling along with the overall sector as home sales remain sluggish. In the first four months of the year, its aggregate pre-sales declined by 68 per cent year on year to 6.55 billion yuan (HK$7.07 billion).
Mainland developers are struggling with their debt problems even after Beijing launched supportive measures to inject liquidity into distressed players earlier this year, while several big cities such as Hangzhou and Xian have removed home purchase curbs.
Agile previously said on its WeChat account in February many of its projects in Chongqing, Guangzhou and Kunming had been included in local governments’ “whitelists”.
It delivered more than 72,000 homes in 120 projects across 60 cities last year, the developer added.
Last week, Country Garden Holdings, one of the largest developers in China by sales, serviced interest worth 65.95 million yuan on two onshore bonds totalling 17 billion yuan due on May 9 after missing the initial repayment date.
The cash-strapped developer had initially alarmed the market when it said it would not be able to meet the payment deadline because of lower-than-expected sales.
Chairwoman Yang Huiyan on Monday called on the company’s employees to get through these difficult times, saying the developer would get over the crisis with the help of the government’s latest measures, citing the experience of US property giant Lennar that recovered from a 10-year turmoil, according to a press release on the Guangdongbased firm’s WeChat account.
Meanwhile, the transacted home sales of China’s top 100 developers extended the decline in April, dropping by 44.9 per cent year on year and 12.9 per cent month on month to 312 billion yuan, according to research firm China Real Estate Information Corporation.
Moody’s Ratings estimated national new home sales would fall by up to 15 per cent this year because of weaker economic prospects and concerns over on-time project completion and delivery.
“Government support will help stimulate demand, though we do not expect a notable rebound in contracted sales in the near term,” the rating agency said in a note yesterday.
We do not expect a notable rebound in contracted sales in the near term MOODY’S RATINGS