Country Garden, Sunac debt deals bring respite for China’s property sector

Country Garden, Sunac debt deals bring respite for China's property sector

HONG KONG: Despite the fact that Chinese designers Country Garden and Sunac forged loan agreements with creditors to help the crisis-stricken real estate industry, there was still doubt regarding a treatment in house sales.

Shares of Sunac China Holdings increased by as much as 14 % on Tuesday( Sept 19) following the approval of its US$ 9 billion offshore debt restructuring plan by creditors, the first approval for such a big Chinese developer’s debt overhaul.

Separately, according to two sources with knowledge of the situation, cash-starved Country Garden received approval from lenders to extend payments on another inland relationship, the last in the sight of eight bonds it has been requesting extensions for.

The changes occur as Beijing intensifies its efforts to revitalize the real estate industry, which makes up about a third of the world’s second-largest market, and has recently unveiled numerous assistance measures.

Late on Monday, Sunac announced that the reform program proposed and approved by some creditors in March had received approval from creditors holding 98.3 % of the overall value of securities who attended the vote. At a hearing scheduled for October 5, the developer may ask the Hong Kong judge for approval of the strategy.

A part of its loan may be converted into convertible securities backed by its Hong Kong-listed stock as part of the reform conditions, along with fresh information with maturities of two to nine years.

Gary Ng, top scholar at Natixis Corporate and Investment Bank, said,” We haven’t seen much improvement on the seaward business, so this shows at least some Taiwanese developers are trying to reach an agreement.”

Investors would be able to recover their investment if the program may be successfully carried out, he continued, depending on whether China’s real estate market recovery could produce enough cash flows.