Corporate Debt Restructuring Masterclass

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

Guangzhou R&F Properties is seeking bondholders’ approval via a consent solicitation to seek waivers of existing/potential/events of default on 10 of its dollar bonds via a maturity extension. The bonds in consideration are its 5.75% 2022s, 9.125% 2022s, 12.375% 2022s, 5.875% 2023s, 8.125% 2023s, 11.75% 2023s, 8.625% 2024s, 8.625% 2024s, 8.125% 2024s and 11.625% 2024s. The bonds with maturity ranging from 2022-2024 have a combined amount outstanding of $5.16bn. The developer has sought to extend the maturities of its 2022s by three years by swapping them with new 6.5% bonds due 2025. For the 2023s and 2024s, it plans to extend the maturity by four years, by swapping them with new 6.5% bonds due 2027 and 2028 respectively. Research firm Lucror Analytics notes that the new bonds will be amortizing with the following details:

  • For the new 2025s, 25% of the principal will be redeemed after 2 years and 60% after 2.5 years
  • For the new 2027s, 5% of the principal will be redeemed after 2.5 years, 10% after 3 years, 30% after 3.5 years, 50% after 4 years and 70% after 4.5 years.
  • For the new 2028s, 5% of the principal will be redeemed after 3 years, 15% after 3.5 years, 25% after 4 years, 40% after 4.5 years, 60% after 5 years and 80% after 5.5 years.

If R&F Properties fails to get bondholders’ approval, the developer said that it will resort to restructuring its debt according to proposed terms already circulated to bondholders. Bondholders can vote until July 7 and will receive $5 for every $1,000 of principal. Raymond Cheng, head of China and Hong Kong research at CGS-CIMB Securities said, “Other highly indebted mainland developers such as Shimao Group, Sunac and some smaller ones, especially those with offshore debts due late this month or next month, may do the same”.

R&F’s dollar bonds issued by Easy Tactic were trading flat at distressed levels of 20 cents on the dollar.

For the exchange filing, click here

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