10th January 2025 – (Beijing) Shares of Sunac China (1918.HK) fell by as much as 30% on Friday following the filing of a liquidation petition against the financially troubled developer. This marks the latest incident in a growing wave of such petitions amid an ongoing debt crisis in China’s property sector.
The petition was submitted by a subsidiary of state-owned China Cinda Asset Management (1359.HK), and a hearing is set for 19th March, as indicated by the Hong Kong judiciary’s website.
In response to the news, Sunac’s stock price dropped significantly, reaching a low of HK$1.23, resulting in a decline of 21.1% within the first half of the trading session, with a trading volume of HK$1.09 billion.
Moreover, recent reports from Reuters revealed that Sunac informed some dollar bondholders that it may be unable to repay bonds due in September, citing weak sales that could trigger a new round of offshore debt restructuring.
Sources familiar with the situation have indicated that Sunac is considering alternative solutions for the September bond maturities, although specific details have yet to be disclosed to creditors. There is uncertainty regarding whether the company will extend the maturity dates of some bonds due in September. Additionally, Sunac may contemplate restructuring all offshore debt during a potential second round of debt reorganisation, which could involve significant write-downs and further equity swaps.
Sunac’s shares in Hong Kong dropped by as much as 29.7% to HK$1.23 during morning trading, marking the largest one-day percentage decline since October 8, according to data from LSEG.
The developer did not immediately respond to requests for comment. Sunac joins a list of other Chinese developers, including Country Garden (2007.HK) and state-backed Sino-Ocean (3377.HK), that are also facing liquidation petitions within a sector struggling with liquidity issues since 2021, leading to a rising number of defaults on debt repayments.
The Chinese government has implemented various measures over the past year to rejuvenate the crucial property sector, but these initiatives have had minimal effect on homebuyer confidence in the world’s second-largest economy.
Sources have informed Reuters that Sunac has communicated to bondholders its unlikelihood of meeting the upcoming offshore bond maturity deadline in September, part of the developer’s initial debt restructuring completed in 2023.
Before the property crisis began in 2021, Sunac was one of China’s leading developers by sales volume and was the first to complete a comprehensive restructuring of its $9 billion offshore debt in November 2023. The company had faced a previous liquidation petition in 2022, which was later withdrawn in 2023.
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