Corporate Debt Restructuring Masterclass

18 July 2022 (Mon), 5pm Singapore/HK time

Chinese property developer Greenland Holding was downgraded to SD (Selective default) from CC by S&P upon the completion of the maturity extension of its $500mn bonds due June 25, 2022 by one year. The rating agency sees the transaction as a distressed debt restructuring and equivalent to a default. If Greenland had not opted for a maturity extension, then it likely would have lacked the resources and funding options to fully repay them upon maturity, S&P noted. Over the next 12 months the company has a significant amount of offshore debt maturities of about RMB 16.4bn ($2.4bn).

Greenland Global Investment’s dollar bond 5.875% 2024 was trading at 31-32 cents on the dollar.

Fitch downgraded Guangzhou R&F Properties to C from CC. The downgrade ensues the issuance of a consent solicitation by R&F properties on Monday, seeking bondholders’ approval for a maturity extension and waivers on existing/potential events of default. Fitch considers the proposed amendments as a distressed debt exchange (DDE). Here, the proposed extension of its bonds’ maturity dates bonds and reduction of coupon rates represent a material reduction in terms, they said. The consent solicitation was also necessary to avoid default, evident from R&F asking bondholders to exclude “failure to redeem or repay the principal and/or interest” from the events of the default. In the event that the consent solicitation for any bonds are unsuccessful, R&F has also mentioned they will have to resort to conducting a restructuring of affected bonds. Fitch adds that if the consent solicitation is successful, R&F Properties will be further downgraded to Restricted Default (RD), after which Fitch will review their credit profile again.

R&F bonds are broadly trading lower by 0.3-0.5 points, at distressed levels of ~23 cents to the dollar.

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