Offbeat Sinic, this other Chinese real estate giant unable to reimburse a loan

12:55  13 october  2021
12:55  13 october  2021 Source:   lexpress.fr

trading exposed to Evergrande shares

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The state of the Chinese real estate market has something to worry when a third promoter has announced that it could not repay its debts for liquidity. He could shake the whole sector.

Les promoteurs immobilier chinois en crise © Christmas Celis / AFP Chinese real estate promoters in crisis

This is the third Chinese real estate developer in the turmoil. Sinic warned that it could not reimburse a loan "lack of cash". It is not the only group to meet serious financial difficulties since Monday, the group Fantasia, who also troubles to repay his debts, has seen two directors. All at the moment when the sector is shaken by the difficulties of the Evergrande giant, also at the edge of bankruptcy.

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The SINIC group indicated that it was unable to reimburse a $ 250 million loan (€ 216 million), the last deadline on Monday, October 18th. The promoter ensures to be in talks with creditors and other stakeholders regarding refund terms, according to the Specialized Scholarship Area . He "anticipates that he will not have enough cash" to honor this payment, according to a statement dated Tuesday. The firm will have to reimburse another $ 250 million loan in January, and then 210 million next June.

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Sinic made the headlines of the press last month when the group's action had lost 87% on the Hongkong Stock Exchange, in the Fouley of the setbacks of the real estate giant Evergrande riddled with debt. The case has lost the boss of Sinic more than $ 1 billion, according to Forbes. And Sinic's quotations have since suspended on the Hong Kong Stock Exchange.

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These difficulties highlight the concerns in China around real estate, a capital sector for the growth of the second world economy. Evergrande, the private weight of the sector, has been struggling for several weeks to honor its interest payments and deliveries of apartments. The group is at the edge of the chasm and its potential bankruptcy threatens to shake the Chinese real estate sector, or even global financial markets.

But for Jean-Luc Buchalet The founding President of Pythagore Consult, interviewed by the Express in September, not what to fear a scenario to the 2008 and the subprime crisis. "I do not think so, even if financial jenters, probably important, are still to be expected. Simply because China is not a market economy," he says.

An area of ​​difficulty

Monday, Evergrand could reimburse some 127 million euros of bonds to its creditors, according to the Bloomberg Financial Information Agency. This is the third breach of three weeks for the firm, which has a grace period of thirty days before being declared in default. A first grace period expires on October 23rd.

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At the beginning of the month, another promoter, Fantasia Holdings, could not honor a payment of some $ 205.7 million (€ 177 million) due to its creditors. The group announced on Monday the resignation of two members of his management. One of them, Ho Man, expressed his concern of "not having been fully informed of certain crucial questions for the company in a timely manner," said Fantasia in a statement. Fantasia quotations in Hongkong have been suspended at the end of September.

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"The company's liquidity situation could be more tightened than we planned, estimates the rating agency Fitch in a release published Last week. In addition, this incident discurs a doubt about the transparency of the financial information of the company ". The agency has degraded the Fantasia note from B to CCC- Monday, October 5, a decision that emphasizes the possibility of a defect.

The real estate sector has long been one of the locomotives of the Chinese economy with the construction of millions of housing. A frenzy stimulated in particular by the need for most of the Chinese to access the property, almost obliged to social promotion.

But facing the swelling of the debt in real estate, the regulators imposed on the "three red lines" sector, prudential ratios to reduce the use of the borrowing of the promoters. With this decision, "the outbreak of prices is astronomical: the average price of a standard housing represents nearly 33 times the average available annual income of a household," says Jean-Luc Buchalet. The most weakest struggles since maintaining their activities, while sales and prices in real estate slowed in recent months.

Real Estate: Has the bubble in China started to burst? .
© ParenriquelézGarre / Pixabay Real Estate: Has the bubble in China began to burst? As real estate and construction are pillars of the economy in China, the prices of new housing in 70 large and medium-sized cities marked a decline for one year in September. According to Bloomberg's calculations, prices fell on average by almost 1%. This is the first decline since April 2015. winds contrary for real estate in China, while Evergrande and Fantasia worry.

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