China Developers Face Second Round of Restructurings

China’s real estate developers are poised to enter a second round of restructurings, as property sales continue to disappoint and there is little sign that homebuyers’ faith in the market will be restored any time soon. Previous restructurings based on an expectation of improved sales now need to be recast. Issuers including R&F Properties, Modern Land (China) have already proposed to extend again their USD notes payments after they successfully restructured offshore debt back in July 2022 and December 2022, respectively. China South City engaged advisors in April to explore holistic solutions for offshore debt after it missed an $11.7 million mandatory redemption payment due Feb. 9 on its due October 2024 notes and a $13 million coupon due Feb. 12 under its due April 2024 notes despite having previously extended its offshore notes in August 2022. Sunac China, which announced a restructuring effective date occurring in November 2023 after lengthy negotiations with creditors on its RSA, has seen a 41.4% year-over-year decline in revenue for the first half of 2024 and a 9.68 billion Chinese yuan operating loss, leading investors to question whether the company might need to perform another round of restructuring. Developers have already extended onshore debt[...]