Fantasia Holdings Group (花樣年控股集團), a Chinese homebuilder, on Monday missed payments on debt obligations, adding to worries over the country’s property sector as embattled giant China Evergrande Group (恆大集團) teeters on the brink of collapse.
Fears of contagion through the Chinese economy have grown as Evergrande, the most indebted of the country’s private homebuilders, struggles with more than US$300 billion in liabilities and heads toward a massive restructuring.
Fantasia Holdings failed to repay a US$205.7 million note, the Shenzhen-based company said in a statement.
Photo: AP
This came as property management firm Country Garden Services Holdings Co (碧桂園) added that a unit of Fantasia had missed repayment on a 700 million yuan (US$108 million) loan, saying it was likely that Fantasia would default.
The news comes as investors await news from Evergrande after it suspended trading of its shares on Monday pending an announcement on a “major transaction,” with reports saying Hong Kong real-estate firm Hopson Development Holdings Ltd (合生創展集團) planned to buy a 51 percent stake in its property services arm.
While Fantasia is a smaller player in the market than Evergrande, its struggles highlight investor concerns over companies’ financial disclosures.
Fitch Ratings on Monday downgraded Fantasia to “CCC-,” which indicates default is a possibility.
The ratings agency said in a statement that although media reports said Fantasia missed an earlier payment to bondholders, the bond “does not appear to have been disclosed in the company’s financial reports.”
“We believe the existence of these bonds means that the company’s liquidity situation could be tighter than we previously expected,” it said.
“Furthermore, this incident casts doubt on the transparency of the company’s financial disclosures,” it said.
Separately, S&P Global Ratings has downgraded another Chinese property firm — Sinic Holdings Group Co (新力控股集團) — saying that its “debt-servicing ability has almost been depleted.”
Sinic has been unable to service interest repayments, which could result in “accelerating repayments on Sinic’s other debt obligations,” S&P said on Monday.
Fitch yesterday downgraded Shanghai-based Sinic from “CCC” to “C,” reflecting its view that “a default-like process has begun” for the company.
Sinic chairman Zhang Yuanlin (張園林) last month lost more than US$1 billion in a market meltdown linked to fears about Evergrande.
Forbes reported that Zhang’s net worth dropped from US$1.3 billion to US$250.7 million on Sept. 20, when his firm was forced to halt trading in Hong Kong following an 87 percent slump in its share price.
China’s real-estate sector has been under tightened scrutiny in the past few months, with regulators last year announcing caps for three different debt ratios in a scheme dubbed the “three red lines.”
Beijing has stayed silent on the travails of Evergrande, but state media has trailed responses in a nod to the mood toward a private company that grew on a debt binge in the boom years of Chinese real estate.
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