• Chinese property sector struggles persist, with state-backed developers at risk
• Australian private credit faces scrutiny, with funds gating and valuations reduced
• Market volatility and conflict may impact new issuance

 

Three main themes have shaped the Asia Pacific non-investment-grade credit market so far this year: relatively good high-yield primary bond issuance volumes, the metastasis of property stress to state-backed Chinese developers and the growing scrutiny of Australian private credit, particularly in real estate.

AI-related investments are still in their early innings in APAC with limited impact thus far on the region’s high-yield markets.

SoftBank’s USD 11bn-equivalent multi-tranche deal boosts 10M26 HY issuance volume

High-yield-bond issuance in the region hit USD 50.19bn through 80 deals across 98 tranches in the ten months through 31 October. That is already 28% above the USD 39.15bn issued in the whole of last year and 40% more than the combined USD 35.76bn in 2023 and 2024.

Debtwire’s tally includes EUR, AUD and USD issuances, banks’ Additional Tier 1 Capital securities and high-yielding notes from better-rated issuers but excludes deals from Chinese local-government financing vehicles (LGFVs) (see Excel for list).

Japan was the largest source of issuance in 10M26, contributing USD 16.55bn, or 33%, of the total, driven overwhelmingly by technology-investment holding company SoftBank Group Corp’s USD 10bn and EUR 1bn (USD 1.12bn) multi-tranche offering in September.

SoftBank is to use bond proceeds to help fund its investment in ChatGPT developer OpenAI. The combined USD and EUR transaction attracted about USD 20bn of preliminary investor interest, according to a Bloomberg report, and is the largest HY-bond offering by an APAC issuer, according to LSEG data.

India was the second-largest contributor to the APAC volume in 10M26 with a 12% share. USD and EUR bond issuances from Indian corporates and financial institutions increase 28% YoY to USD 6.09bn in 10M26. Anil Agarwal-promoted mining conglomerate Vedanta Resources accounted for USD 2.15bn, or 35%, of the total Indian bond issuance.

Australia ranked third by new-issue volume, contributing USD 4.16bn, or about 8% of the total, primarily driven by metal & mining companies including PLS Group, Whitehaven Coal and Mineral Resources.

Pakistan ranked fourth, contributing USD 3.75bn, or about 7% of the total. Returning to the international HY-bond market after a three-year hiatus, the country has raised USD 3.75bn year to date, including a USD 3bn deal, its largest international bond offering. Continued support from multilateral institutions, including the International Monetary Fund and Islamic Development Bank helped the sovereign reinforce investor confidence and improve its access to capital markets.

Macau issuers were relatively active in 10M26. Macau gaming operators, including SJM Holdings, MGM China and Studio City, issued USD 1.59bn, helping lift the total gaming-sector issuance to USD 2.84bn, or 6% of the APAC tally. (see Debtwire’s latest quarterly update on Macau’s gaming sector for more details).

HY issuance from mainland China corporates and financial institutions declined 20% YoY to USD 3.47bn, reducing the country’s share of the APAC volume to 7%, from 12% in 2025.

The remaining issuance came from Indonesia, Hong Kong, Mongolia, Laos, Thailand, Malaysia, Singapore and the Philippines.

Volatility could deter new issuance

Volumes could rise further before 2026 wraps up, although issuers could be deterred by continued US Treasury market volatility and the prospect of a prolonged conflict in the Middle East.

Several transactions remain in the pipeline. The prospective issuers include:

• Thailand Stock Exchange-listed renewable-energy company Energy Absolute’s unit Hanuman Wind Power, which as of mid-September was still seeking to print a USD bond despite two unsuccessful attempts in January and June
• Shanghai-listed non-ferrous-metals miner Pengxin International Mining is looking to issue bonds partly to fund USD 600m of capital expenditure
• Golden Energy and Resources-backed Australian metallurgical-coal miner GM3, which is looking to refinance a USD 625m loan due in 2029
• Bangladesh, which is reportedly planning to raise up to USD 1bn via its first international sovereign bond issuance

China property malaise continues into fifth year since poster child Evergrande’s default in 2021

The malaise in the Chinese property sector continues well into the fifth year since poster child China Evergrande Group’s default in 2021.

Evergrande has been in liquidation since January 2024. Its founder is sentenced to life in prison for charges including financial fraud, and the value of the developer’s nearly USD 20bn in offshore bonds has all but evaporated. (China Evergrande’s profile on Debtwire’s Restructuring Database).

Structural issues continue to persist in Greater China’s property and property-related sectors. In 2026, liquidity troubles spread to once thought to be almost bullet-proof state-backed developers, namely Zhuhai Huafa Group and China Vanke.

Like last year, the central themes for the Chinese property sector this year are second-round debt recasts, distressed debt exchanges and asset disposals.

Chinese developer and toll-road operator Road King Infrastructure was among those that took the recast road once again. The company put forward a contentious proposal to restructure USD 2.4bn offshore debt, treating its bonds and typically junior perpetual securities equally.

The latest company to be hurt by the long-drawn property slump is investment-grade-rated LGFV Zhuhai Huafa Group and its property-development unit Zhuhai Huafa Properties. News of Zhuhai Huafa’s potential default took centerstage in late October. Before that, headlines through most of the year were about a potential hard default or bailout of Shenzhen government-backed developer China Vanke (see Debtwire’s 3 September credit research, Vanke faces CNY 11.75bn potential public-bond obligations by 1 September 2027 for details).

Huafa Group has started discussions to extend maturities of bank loans and non-standard debt with China International Capital Corp (CICC) leading due diligence, Debtwire reported on 29 October. The Zhuhai government will allocate more than CNY 100bn (USD 15bn) to support Zhuhai Huafa Group in addressing its issues, 21st Century Business Herald reported on 4 November.

The group missed payments on two unspecified trust products and is negotiating with at least three domestic banks to extend loan maturities and lower interest rates, Bloomberg reported on 26 October. Huafa’s guaranteed CNH bonds were among the worst performing APAC bonds in 10M26, declining 30-70 points in October.

(see Debtwire’s credit research on 3 November, Zhuhai Huafa’s sizeable investment portfolio covers about 33% of debt maturing by 30 September 2027; and on 30 October Local-government-owned Huafa Group needs support to handle USD 25bn-equivalent debt maturities by June next year).

Macro data and news for the Chinese property sector continue to be grim reading in 2026, extending the downturn in the previous four years. Aggregate contracted sales of developers tracked by Debtwire fell to CNY 1.33tn in 2025 from CNY 5.03tn in 2021, a cumulative 74% decline, equivalent to an average 28% contraction annually. Over the same period, national real estate investment proved more resilient but followed the same direction, falling 44% to CNY 8.28tn in 2025 from a 2021 peak, or 13% annually.

The contraction continued in 2026. Aggregate contracted sales declined 15% YoY to CNY 838bn in 9M26, while real estate investment fell 21% YoY to CNY 5.34tn. The sharper decline in investment suggests that developers remained reluctant to commit capital to new projects as weak sales, falling home prices and financing constraints continued to weigh on the sector. (see Debtwire’s latest monthly review of China’s performing and distressed developers).

As of 23 October, 66 of the 84 Chinese developers tracked by Debtwire, or 79%, had defaulted on offshore bonds or entered restructuring or distressed-financing processes during the current downcycle. Together, these developers have about USD 149.37bn of offshore public bonds outstanding across 318 tranches.

Despite the negative backdrop for the sector, more performing developers managed to issue USD bonds this year. Chinese developers have raised USD 2.36bn-equivalent in offshore HY bonds through 31 October, compared with the USD 1.96bn in the same period in 2025 and close to the USD 2.87bn issued in the entire 2025.

Debtwire‘s legal analyses on the Evergrande situation, including liquidators’ USD 5.6bn claim against PwC International: April 2025, July 2026, August 2026, September 2026.

Debtwire’s legal analyses on the Road King’s contentious plan to treat perps pari passu with bonds: 17 June 2026, 24 June 2026.

The Greater China property-related names below were the defining credit stories so far in 2026.

China Vanke’s state-engineered non-default

The Hong Kong- and Shenzhen-listed and Shenzhen government-backed developer has so far avoided a formal default, but operations and liquidity continue to deteriorate.

The developer reported CNY 23.94bn net loss attributable to shareholders in 9M26. Net loss attributable to shareholders ballooned to CNY 88.56bn in 2025 from CNY 49.48bn in 2024 on the back of low gross margins on projects with high historical land-acquisition costs, large-scale asset impairments, and losses on asset and equity disposals at discounts to book value.

Vanke reported CNY 52.45bn total cash as of 30 September 2026, down from CNY 67.24bn as of 31 December 2025. Total debt stood at CNY 330.86bn as of 30 September 2026, of which CNY 189.80bn was due by 30 September 2027, its 3Q26 financial statements show.

Supported by majority shareholder Shenzhen Metro Group and regulatory interventions, Vanke’s response to the stress was largely to buy time rather than a holistic balance sheet repair. The next test for the developer comes this December when the 60% balance principal portion on two, once restructured, onshore bond tranches — CNY 1.2bn 3% (22万科MTN004) due-15 December 2026 and CNY 2.22bn 3% (22万科MTN005) due-28 December 2026 — becomes payable.

Vanke has so far relied on cash transfusions from Shenzhen State-owned Assets Supervision and Administration Commission (SASAC)-owned Shenzhen Metro to fund a series of amend-and-extends for its onshore bonds.

Vanke completed amend-and-extend deals for 10 public onshore bonds with aggregate CNY 18.1bn principal so far this year, in which 40% of bond principal was repaid at the original maturity date, and the remaining 60% principal was deferred for a year.

USD-bond-issuing subsidiary Vanke Real Estate (Hong Kong) proposed in September to extend the maturity of HKD 23.23bn unsecured offshore loans and around HKD 5.44bn bilateral loans by three years and plans to repay lenders earlier on a pro rata basis if it can sell its about 30% stake in GLP Holdings (GLPH). Cayman Islands-incorporated GLPH is the ultimate parent of unlisted, Singapore-incorporated, warehouse and internet datacenters investor and operator GLP Pte Ltd.

The developer provided offshore lenders with a list of offshore assets that could potentially be pledged for loans, Debtwire reported on 20 May 2026. The CNY 39.37bn asset package includes the GLPH stake valued at CNY 34.89bn.

Vanke and Shenzhen municipal officials have since 30 September been holding one-to-one lender meetings mostly in Hong Kong with the goal of an early December signing to term out offshore loans.

The developer so far remains current on its two offshore bonds — its USD 1bn 3.975% due-9 November 2027s and USD 300m 3.5% due-12 November 2029s — with chatter that the tranches could also be repaid early on a pro rata basis with the offshore loans if GLPH is sold.

The value of the developer’s asset pool available to be pledged to unsecured creditors continues to shrink as more of its unsecured debt is refinanced with secured debt, per Debtwire’s analysis on 3 September. Meanwhile, the carrying value of its about 30% GLPH stake fell 23.5% YoY, to CNY 11.60bn as of 31 December 2025. About 8% of that stake is already pledged for existing borrowings.

With little signs of an imminent turnaround in China’s property sector, Vanke’s offshore bank lenders and bondholders will likely need to look towards the GLPH stake and a mishmash of less-significant offshore assets for recoveries.

GLP’s equity valuation is likely to remain depressed as it faces challenges to turning around its China business amid a general slowdown in the economy. (see the next section)

GLP Holdings: Is the funding model broken?

While GLP can meet its near-term obligations, questions remain on whether its funding model continues to be viable over a longer term amid a soft macro environment particularly in China, and weak investor sentiment (see Debtwire’s 12 May Credit Report).

The Singapore-headquartered company doesn’t have significant bond maturities due until its USD 1bn 9.75% bonds come due on 20 May 2028.

GLP’s USD bonds and perpetual securities fell 12-15 points in mid-March after chatter that China’s National Financial Regulatory Administration (NFRA) told a large Chinese insurer’s asset-management arm to not increase exposure to the company.

GLP stated in a 17 March release that neither the company nor its “key insurance investors” that it has spoken to, received the guidance from regulators as of that day. During an 8 May post-2025-results call, the company’s CFO Nicholas Johnson reiterated that the company has not received any regulatory notification regarding reported restrictions on Chinese insurance companies over increasing their exposure to the company.

Chinese insurers comprise the bulk of GLP’s recent LP base. The company’s ability to raise LP capital has slowed at a time when it needs to return capital by May 2027 or to extend the maturity for three funds carrying USD 6.64bn of commitments, per Debtwire‘s May credit report.

GLP has so this year managed its liquidity by obtaining a USD 800m credit line and earmarking for sale five to six non-China datacentres with net asset value of around USD 1bn, as Debtwire reported on 26 May. The company also decided against calling its USD 850m 4.5% perps on the 17 May 2026 first call date.

GLP received in 2H25 an initial USD 500m tranche of a USD 1.5bn total equity investment from Abu Dhabi Investment Authority (ADIA) while the second USD 500m tranche is delayed, as Debtwire reported on 5 October.

The company had sufficient cash inflows in 2025 to cover interest, coupons and perpetual distributions by 1.1x, per Debtwire’s May credit report.

Looking ahead, GLP’s longer-term viability depends on its ability to continue capital-raising including receiving the remaining investment from ADIA as well as from subsidiary GLP China’s REIT issuance and a planned IPO.

New World Development takes steps to clear legacy assets and build liquidity runway

Across the border in Hong Kong, New World Development (NWD) continued to extend its liquidity runway in 2026 as it seeks to extend the maturity of about HKD 88bn loan by two years.

The company’s FY26 results highlighted the challenge: Unrestricted cash fell to HKD 12.74bn as of 30 June, against HKD 25.42bn debt due in FY27 through 30 June next year.

A significant balance-sheet decision came with NWD’s planned exit from the retail and office complex, 11 SKIES, adjacent to Hong Kong’s international airport. The company agreed to pay HKD 3.35bn, comprising a HKD 2.3bn break fee and HKD 1.05bn to complete the remaining works for the project.

The exit resulted in a HKD 18.32bn impairment that largely contributed to a HKD 26.82bn FY26 net loss but removed lease obligations running through 2066. The lease obligation was estimated at no less than HKD 1.8bn per year by UBS.

NWD continued the liability-management strategy it deployed in 2025, using flagship Hong Kong retail and commercial complex Victoria Dockside (VD) as the cornerstone asset to optimise its capital structure. NWD swapped in December 2025 USD 2.29bn holdco perpetual securities and USD 236m holdco bonds into new USD 1.18bn perps and USD 186m bonds that are structurally senior with respect to cash flows from the Victoria Dockside asset. The December 2025 exchange implied an average of ~49% and ~21% haircut on the original perps and bonds, respectively.

NWD also obtained a HKD 3.95bn Deutsche Bank-arranged facility in September 2025 secured against the asset, which was upsized to HKD 4.9bn in September 2026.

NWD launched in October a second liability-management exercise to swap up to USD 632m aggregate of its three nearest-maturing USD holdco bonds — USD 457m 4.75% due-23 January 2027s, USD 163m 5.875% due-16 June 2027s and USD 372m 8.625% due-8 February 2028s — into up to USD 600m new 7.375% notes due 2032 to be issued by a wholly owned subsidiary of NWD. The subsidiary’s only significant asset are receivables from VD’s holdco.

Despite offering up to 100.25c to bondholders including a 5.25c upfront cash repayment, the second bond exchange was less successful than the first one. Ultimately, only USD 199m of eligible bonds were submitted for tender and were exchanged into new notes.

The lower level of holder interest in the second exchange transaction could be partly attributed to higher returns if bondholders chose not to exchange, and structural subordination of the new 2032s to perps and bonds issued in the first exchange (see Debtwire’s 7 October analyst snapshot for details).

Covenants embedded with the HKD 88.2bn bank facilities announced in June 2025 require a matching loan paydown for every dollar of cash paid to bondholders, limiting NWD’s ability to further raise the upfront cash portion for the exchange, per management during October investor meetings.

Looking ahead, key events for NWD to continue liquidity-runway expansion include a possible equity injection to deleverage (see Debtwire’s 5 March credit report for more details). Bain Capital and RRJ were as of October and July, respectively, assessing potential investments into NWD after Blackstone reportedly withdrew from discussions over a USD 4bn investment in May.

NWD plans to address the remaining USD 565m principal across its two due-2027 USD bonds from internal resources, including proceeds from a proposed listing of Shanghai commercial assets Shanghai K11 Art Mall and Shanghai K11 Atelier NWT into a commercial REIT (C-REIT), as Debtwire reported on 5 October. The proposed C-REIT listing was accepted by the Shanghai Stock Exchange on 19 September.

NWD could potentially raise up to CNY 9.92bn (USD 1.48bn) net proceeds if all mainland properties — including the approved Shanghai K11 REIT — were listed as REITs, Debtwire reported on 23 September.

West China Cement: Property weakness travels upstream

Hong Kong-listed cement producer West China Cement (WCC) provided a reminder that China’s property downturn extends well beyond developers.

WCC, whose traditional demand base was closely tied to Chinese construction, recorded during 1H26 its first loss from onshore operations in 30 years due to declining sales volume and lower average selling prices.

Against this backdrop, WCC accelerated its overseas pivot by offloading onshore assets while continuing to invest overseas. The strategy has so far supported earnings as its overseas operations’ cement-sales gross profit surged 58% YoY to CNY 1.20bn in 1H26, equivalent to 95% of the group’s total cement-sales gross profit.

But the pivot changed, instead of removing credit risk. WCC’s major overseas markets are exposed to armed conflict, foreign exchange shortages, and cash-repatriation constraints. Debtwire initially attributed a 300bps-350bps premium over WCC’s Turkish cement peers to these risks (see Debtwire’s 23 April 2026 credit report), with the gap later widening to roughly 480bps as the Ebola outbreak spread and bond index-exclusion concerns intensified (see Debtwire’s 28 August 2026 credit report).

The proposed disposal of Chinese assets to state-backed Conch Cement therefore became the central catalyst, although a definitive outcome had yet to be announced by management’s self-imposed end-October deadline. WCC in late August investor meetings stated that asset-sale proceeds would first be used to repay local debt with any surplus potentially directed towards WCC’s USD notes due in 2028.

Australia’s private credit stress and scrutiny

Signs of stress in Australia’s private credit market emerged around 2Q26 amid a downturn in the country’s real-estate sector along with an increase in interest rates. The Reserve Bank of Australia has raised interest rates five times so far this year.

Private, family-owned, residential-property developer Bathla Group’s collapse in August with more than AUD 3.40bn owed to several private credit funds proved to be the inflection point for Australia’s private credit market historically dominated by real-estate-backed debt.

After hitting a total of AUD 12.60bn in 4Q25, the volume of private-credit transactions in Australia has fallen every quarter so far this year: to AUD 7.19bn in 1Q26, AUD 4.09bn in 2Q26 and AUD 2.36bn in 3Q26, Debtwire’s records show. Debtwire’s private credit data is compiled from proprietary and media reports as well as company announcements.

Real-estate-linked deals accounted for AUD 5.48bn, or 40.2%, of the 9M26 volume, followed by education (AUD 1.65bn/12.1%) and pharmaceuticals and medical equipment (AUD 1.57bn/11.5%).

The three largest transactions in 9M26 were:

1. A more than AUD 1bn, BBSY +475bps, seven-year senior secured cov-lite unitranche loan provided by Blackstone, Apollo Global Management and Goldman Sachs Asset Management to fund BGH Capital’s proposed AUD 2.37bn (USD 1.71bn) acquisition of Aspen Pharmacare’s APAC business.
2. Quadrant Private Equity-controlled Affinity Education Group’s agreement with lenders to extend the maturity of an AUD 650m secured loan due August 2026 to September 2029.
3. HMC Capital’s AUD 603m fundraising from KKR for its energy-transition platform via 14%, seven-year preference shares.

Notable large transactions extended across residential development as well as built-to-rent and industrial property, including ALAND’s AUD 495.4m North Sydney property refinancing loan notes, Alceon Group’s Alceon Credit Fund No 5’s AUD 400m (USD 277.7m) loan notes, and 825 Stanley Finance Pty Ltd’s (entity jointly owned by Sarazin and Southlake Group) AUD 306.4m (USD 218.4m) loan notes.

Bathla bloodbath

Teneo was appointed as Bathla’s voluntary administrator (VA) on 25 August. The group had accumulated more than AUD 3.4bn of debt from at least 40 lenders. The group had 16,500 residential units across 219 developments in its pipeline, including 2,500 unfinished apartments across 45 active construction projects.

Bathla was the largest APAC restructuring or insolvency mandate in 3Q26, putting Australia ahead of China by newly mandated debt during the period (see Debtwire’s APAC Advisory Mandates Report on 27 October).

Bathla Fallout triggers gating across private credit funds

Due to their large exposures to Bathla, and as Australian property prices continued to fall, several private credit funds reportedly put up the gates temporarily to prevent investors from redeeming funds from property/mortgage-focused funds. Among those are CVS Lane, the private credit firm run by the Liberman family; Centuria Bass, the private credit arm of ASX-listed real-estate investor Centuria Capital; and ASX-listed Metrics Credit Partners. MA Financial, with no exposure to Bathla but with funds focused on the property sector, also prevented investors from redeeming funds.

Private credit asset manager Centuria Bass was among the first to temporarily halt redemption requests following Bathla’s collapse. Centuria Bass, which has AUD 2.5bn in assets under management, halted redemption requests in two private credit funds, The Australian Financial Review (AFR) reported on 14 August. The Centuria Bass Credit Fund had almost 24% exposure to Bathla, according to the report.

CVS Lane temporarily halted investor redemptions for its AUD 572m First Mortgage Fund and AUD 500m Property Finance Fund, with the vehicles carrying Bathla exposures of 18% and 24%, respectively, AFR reported on 28 August. CVS Lane extended redemption suspensions on the two property-backed private credit funds, citing worsening conditions in Australia’s real-estate market, the same masthead reported on 25 October.

Metrics Partners, which manages about AUD 35bn, froze withdrawals from two wholesale funds (Wholesale Investment Trust and MCP Real Estate Debt Fund), paused lending for 90 days and cut valuations across three listed funds following a dispute with auditor KPMG over valuation assumptions, according to a 29 September AFR report. Metrics may compensate investors following the auditor-driven valuation reductions and plans to review its governance framework, the newspaper reported.

MA Financial disclosed that 30% of loans in its AUD 2.3bn Real Estate Income Fund were more than 30 days in default, AFR reported on 16 September. It later suspended redemptions from its over AUD 2.1bn Secured Loan Series from 31 October until at least March 2027. The fund manager wound-up MA Secured Real Estate Income fund, a feeder fund into the Secured Loan Series, on 21 October.

ASX-listed Finexia Financial Group Ltd announced on 16 September that it would cease all private credit lending activity following large losses on loans to child-care operators.

Amid the market downturn, private credit provider MaxCap, 50% owned by Apollo Global Management and with about AUD 7bn AUM, laid off 100 staff, the AFR reported.

Chronicle of shortcomings foretold

The wave of fund stress emerged despite heightened regulatory scrutiny of Australia’s private-credit sector since 2025.

The Australian Securities and Investments Commission (ASIC) published private-credit review findings in September 2025 which identified shortcomings including fee structures, valuations, related-party transactions and loan structuring.

The regulator tightened its oversight of the sector in late March by requesting private credit fund managers to submit data on fund defaults, redemptions and leverage weekly for six weeks.

The ASIC on 18 June put the sector “on notice” and warned managers to value assets accurately for the 30 June yearend financial reporting.

The ASIC issued stop-sale orders on private credit fund products offered to retail investors managed by Remara, Australian Secure Capital Fund and Murdoch Clarke on 22 September, 8 October, and 26 October, respectively, citing among other things misleading fund disclosures.

Simone Constant, a commissioner at the ASIC, warned in a speech that the regulator may pursue private credit firms through regulatory and enforcement actions if they fail to improve standards by yearend. The speech was on 22 September at the Commercial & Asset Finance Brokers Association of Australia (CAFBA) Commercial Property & Development Finance Summit in Sydney.

 

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