Chinese property developer Jiayuan was downgraded to C from B by Fitch, on missing a coupon payment due on April 30 for its $200mn bonds maturing on October 30, 2022. Now the company has a 30-day grace period for making the payment before default event triggers. Fitch believes Jiayuan may not be able to access capital markets in the short-term on weak fundamentals and will depend on cash in hand and internal cash flows for near future debt maturities in H2 2022 and H1 2023. Available cash balance at the Holdco level may be just sufficient to cover the $200mn bonds maturing in October. Fitch notes it may not be sufficient to pay the $176mn bonds maturing in February 2023, and $295mn bonds due April 2023. There may be uncertainties over refinancing and property sales as the homebuyers’ and investors’ confidence of may have been shaken on the recent fall in Jiayuan‘s share and bond prices. The company’s total sales from January-April 2022 fell 43% YoY despite a low base in the previous year. Fitch expects Jiayuan could post negative operating cash flows if sales remain at a similar level.
Jiayuan’s USD 12.5% 2023 was trading at 17-18 cents on the dollar.