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Chinese developer Yuzhou Properties has announced its debt restructuring plan noting that it was in discussions with offshore creditors. It has offered three options:
As of end-2022, Yuzhou had $6.8bn in offshore debt and RMB 12.31bn ($1.7bn) in onshore debt. Yuzhou further added that it has not defaulted on onshore debt. The developer had defaulted on its offshore notes in March 2022 after the 30-day grace period on its bond’s coupon expired. Analysts said there were other challenges ahead for the company and that a debt restructuring “alone cannot resolve the operational challenges”. Declining sales, constrained funding access and depleting cash buffers are some of Yuzhou’s financial pressures, broadly seen across the Chinese property sector.
Yuzhou’s dollar bonds are trading highly distressed levels of 5-6 cents on the dollar.
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