Huafa Group Co., a major China local-government owned conglomerate, is negotiating with creditors to extend debt payments and reduce interest rates. The company has approached at least three Chinese banks since last month, but terms remain unsettled. Huafa derives half its revenue from property development and urban operations.
The funding strains typically seen in private developers are now spreading to state-owned peers amid the ongoing property downturn. The company reported a 16.9 billion yuan ($2.5 billion) loss last year. Huafa has also missed payments on two trust products due recently.
Based in Zhuhai near Macau, the conglomerate saw a record selloff in offshore bonds, with a 1.4 billion yuan bond trading at 89% of face value. The State-Owned Assets Supervision and Administration Commission of Zhuhai controls 93.5% of Huafa, which held 765 billion yuan in total assets and 413 billion yuan in interest-bearing liabilities as of March.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing