Chinese real estate entity Zhongliang Holdings’ long term rating was downgraded to RD (Restricted Default) from ‘C’ by Fitch on the completion of an exchange offer for 90.47% of its May 2022s and 83.66% of its July 2022s for a combination of new a $201.4mn 8.75% bond due April 2023 and a $428.4mn 9.75% bond due December 2023. Further on June 1, the company announced that it also seeks to exchange any or all of its remaining $27.63mn 8.5% bonds due May 2022 and its $71.17mn bonds due July 2022.  Fitch believes the company failed to pay $27mn of principal on its 8.5% bonds that matured on May 19, 2022 and that the amount was not tendered in its exchange offer. The rating agency sees the non-payment of principal can lead to an event of default as per its May 2022 bond indenture.

Zhongliang’s dollar bonds were trading at 26-30 cents to a dollar.

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