, a developer of luxurious flats in China, mentioned it didn’t make a $206 million U.S. buck bond fee that used to be due Oct. 4, including to the malaise surrounding the rustic’s extremely indebted estate corporations.
The corporate, which like
is based totally in Shenzhen, mentioned past due Monday that it didn’t pay the phenomenal fundamental on a 7.375% bond which it issued in 2016. Fantasia at the beginning offered $500 million of this debt and previous this yr purchased again probably the most securities.
The attention of the neglected fee took some marketplace members by means of wonder. Simply days previous, a Fantasia consultant instructed traders that it might make the fee, consistent with a notice from Chuanyi Zhou, a credit score analyst at Lucror Analytics. In past due September, Fantasia mentioned an organization owned by means of its founder purchased a small portion of the similar bond factor.
Hours earlier than Fantasia’s disclosure, Fitch Rankings reduce its score on Fantasia by means of 4 notches to CCC-, reflecting an especially excessive possibility of default. The worldwide score company mentioned the developer reportedly just lately neglected any other fee on a non-public bond—which Fitch used to be in the past blind to—and mentioned the incident “casts doubt on the transparency of the company’s financial disclosures.”
Like its greater peer Evergrande, Fantasia is indexed in Hong Kong and used to be an lively issuer of high-yield buck bonds, that have offered off sharply in contemporary weeks. Considered one of its bonds that comes due in 2024 used to be just lately quoted at 24 cents at the buck, consistent with Tradeweb. Fantasia, in its contemporary first-half file, indexed round $4.3 billion in remarkable buck bonds as of June, together with some issued previous this yr with double-digit share coupons.
Evergrande, China’s maximum indebted developer and the rustic’s biggest issuer of junk bonds, missed interest payments on its buck debt during the last two weeks, however hasn’t made any public disclosures concerning the subject. On Monday, a successful property-management unit of the in poor health developer mentioned it could be the subject of a takeover bid, which might convey much-needed money to Evergrande.
Fantasia used to be based in 1996 by means of Zeng Jie, often referred to as Child Zeng, a niece of former Chinese language Vice President Zeng Qinghong. The corporate is understood for construction high-end residential tasks and comfort flats. Fantasia has dozens of ongoing real-estate tasks in main metropolitan spaces throughout China, in towns together with Beijing, Wuhan, Tianjin and Ningbo.
Fantasia went public in 2009 after elevating $400 million. The corporate just lately had a marketplace capitalization of about $415 million. Its stocks had been halted from buying and selling since Sept. 29 pending an organization announcement. Ms. Zeng is its biggest shareholder and an govt director, consistent with its annual file.
In comparison with Evergrande, Fantasia is considerably smaller in dimension. Its gross sales within the first 9 months of 2021 ranked 73rd amongst its home friends, whilst Evergrande used to be in 3rd position, consistent with a marketplace file by means of analysis company CricChina.
“In our view, this is an issue of willingness to pay instead of ability to pay,” Ms. Zhou of Lucror mentioned of Fantasia’s neglected buck bond fee. She added that the corporate in the past claimed to have sufficient money to satisfy its October bond adulthood and has met a few of its different tasks.
Fantasia didn’t in an instant reply to a request for touch upon Tuesday. In its Monday regulatory submitting, the corporate mentioned its board and leadership will assess the prospective affect of the nonpayment on its monetary situation and money place and supply updates if there are additional trends. It additionally mentioned its stocks would stay suspended from buying and selling.
Fantasia reported the similar of $1.7 billion in income for the primary six months of 2021, up 18.5% from a yr previous, and web benefit of $23.7 million. The corporate mentioned it accomplished “excellent sales performance” all the way through the duration and reported gotten smaller estate gross sales of $4.36 billion, up 61% from a yr previous.
—Alexander Saeedy in New York contributed to this newsletter.
Write to Serena Ng at [email protected]
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