Chinese developer Shimao-guaranteed $174 million notes due March may not be redeemed - trustee

Reuters

Published Feb 23, 2022 08:12AM ET

HONG KONG (Reuters) - Some 1.1 billion yuan ($174 million) of asset-back notes guaranteed by Shimao Group may not be redeemed on maturity next month, the trustee of the notes said in a filing, as the debt crisis for Chinese property developers rumbles on.

Yunnan International Trust Co said in a filing dated Tuesday the assets underpinning the notes had generated less income than expected.

The trust company said it would hold a meeting with investors on March 2 to vote on an unspecified agenda for the notes due March 17.

Shimao did not immediately respond to a request for comment.

Regulatory curbs on borrowing have driven China's property sector into a liquidity crisis, with the struggles of Evergrande, the world's most indebted property firm, to repay its borrowings mirrored at several smaller rivals.

Shimao, which defaulted on a trust loan last month, has been scrambling to extend debt maturities including asset-backed securities and trust loans with creditors.

The Shanghai-based developer and its chairman have also been selling assets in China and overseas to raise funds.

Moody's (NYSE:MCO) downgraded Shimao's corporate family rating (CFR) again on Wednesday to Caa1 from B2, citing the firm's heightened liquidity risks over the next 6-12 months given its slower-than-expected fundraising progress to address its large upcoming debt maturities.

Moody's also changed Shimao's outlook to negative from ratings under review.

Last week, Shimao sought to extend payments of a 6 billion yuan trust loan by two years, and some creditors said they were not happy with the proposal that did not offer any credit enhancement.