China SCE Group defaults on dollar bonds, triggers financial turmoil

Picture courtesy of Bangkok Post

China SCE Group, a Xiamen-based property developer, announced today that it defaulted on its dollar bonds following a non-payment on a syndicated loan, triggering an event of default. The company joins numerous other Chinese property developers who are undergoing a similar financial crisis, defaulting on their offshore debt and kicking off a restructuring process.

In its official filing, SCE stated it will halt trading in its four-dollar bonds, worth an aggregate of US$1.8 billion, from Thursday onwards.

The company cited a decrease in sales and a tightening of liquidity since the second quarter as the main reasons for its financial difficulties.

“The group’s liquid cash and bank deposits may not be sufficient to meet its current and future obligations.”

SCE further explained that the non-payment was related to a US$61 million instalment of principal and interest on a March 2021 syndicated loan. This could potentially lead to early repayment demands from other creditors, although the company has not yet received any such demands.

Following the announcement, SCE shares were not traded in the early afternoon, having already risen by 3.5% in the morning.

The company is now exploring a comprehensive solution to its debt issues, reflecting the challenges faced by Chinese real estate developers amidst the ongoing financial crisis in the industry.

Two weeks ago, Asia-Pacific bond defaults are on the rise, outpacing the global average, amid China’s real estate crisis.

A joint study by the Federation of Thai Capital Market Organizations (FETCO) and the Capital Market Development Fund (CMDF) highlighted a concerning uptick in debenture default rates, signalling a potential global crisis, reported Bangkok Post.

The study revealed that bond defaults occurred at a faster pace in Asia-Pacific, even though these bonds generally have superior credit ratings compared to other regions. To read more click HERE

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Alex Morgan

Alex is a 42-year-old former corporate executive and business consultant with a degree in business administration. Boasting over 15 years of experience working in various industries, including technology, finance, and marketing, Alex has acquired in-depth knowledge about business strategies, management principles, and market trends. In recent years, Alex has transitioned into writing business articles and providing expert commentary on business-related issues. Fluent in English and proficient in data analysis, Alex strives to deliver well-researched and insightful content to readers, combining practical experience with a keen analytical eye to offer valuable perspectives on the ever-evolving business landscape.

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