Document

• Reviewing the offshore restructuring progress of Chinese property developers

Two and a half years into its present crisis and the Chinese property sector is still in shambles; the rebuilding process will keep restructuring professionals busy for the foreseeable future. This report, which focuses exclusively on the Chinese developers that have issued high-yield bonds offshore, provides a summary of the restructuring work that has been completed thus far, along with a glimpse of what lies ahead. Here are five takeaways that will be expanded upon in the attached report.

• The wave of defaults that began in the second half of 2021 drowned nearly everyone. In June 2021, there were 72 offshore high-yield bond-issuing developers, four of whom were in default of their bonds at that time. Since then, another 53 developers have been added to the list of defaulters, including seven in 2023.
• Three developers – China South City Holdings(CSC), Ganglong China Property Group and Huijing Holdings – never defaulted on their bonds but did complete at least one offshore restructuring process. Inclusive of that group, 33 developers have completed 45 processes to restructure 120 offshore bonds with USD 41.9bn principal outstanding since July 2021.
• Many of these restructurings were piecemeal attempts to extend upcoming maturities and buy developers more time to wait for a recovery. But the recovery never came and a total of 23 developers went on to miss offshore bond payments after completing some type of restructuring process. Only four developers completed a holistic offshore restructuring process that involved more than one offshore bond tranche and are not currently in default. This distinguished group includes RiseSun Real Estate Development, Guangzhou R&F Properties, China Fortune Land Development and Sunac China Holdings.
• Forty-one developers have hired advisors and are still in a restructuring process. As the chart on page nine of the attached report shows, seven of these developers – Tahoe Group, Sichuan Languang Development, China Evergrande Group, Sinic Holdings (Group), Fantasia Holdings Group, China Aoyuan Group and Kaisa Group Holdings – appointed restructuring professionals more than two years ago but have yet to complete their processes. Nineteen developers appointed an advisor more than one year ago. Four developers have long since defaulted but have yet to publicly announce the hiring of advisors or provide any information relating to a restructuring process.
• As of this report’s date, ten developers or their bond-issuing vehicles have been hit by creditor-filed winding-up petitions. In five situations – China Properties Group, Yango Group, Sinic, Jiayuan International Group, and Jiangsu Zhongnan Construction Group – courts have handed down winding-up orders.