New Delhi, Oct 6 A Chinese developer of luxury apartments missed $315 million in payments to lenders, sparking fears that financial strains in the country's outsized proprerty sector are spreading beyond the troubled Evergrande conglomerate, CNN reported.
Fantasia Holdings, a Shenzhen-based developer, missed repaying $206 million worth of bonds that matured Monday, the company said in a stock exchange it is now assessing "the potential impact on the financial condition and cash position of the group".
Separately, the property management unit of Country Garden, China's second largest developer by sales after Evergrande, said in a filing that Fantasia had failed to repay a company loan of about 700 million yuan ($109 million). Fantasia had informed the company that it would probably "default on [its] external debts," Country Garden Services added.
S&P and Moody's slapped "default" credit ratings on Fantasia and said the non-payment of principal would likely also put the company in default on its remaining bonds, the report said.
"The downgrade follows Fantasia's announcement... that it had missed payment on its $205.7 million bond due on the same day, and reflects our expectation of weak recovery prospects for Fantasia's bondholders after its default," said Celine Yang, a senior analyst at Moody's.
The news revived fears that debt woes are deepening in China's overextended property sector, which accounted for 29 per cent of outstanding loans issued by Chinese banks in yuan in the second quarter of 2021. The sector is vital to China's economy - real estate and related industries account for around 30 per cent of GDP, the report said.
"The [Chinese] property sector is worrisome," wrote Larry Hu and Xinyu Ji, China economists for Macquarie Group, in a research note on Tuesday.
Fantasia's default shows that Evergrande's troubles "could dampen the sentiment for homebuyers, developers and banks, causing more developers to run into a liquidity crunch," they said, the report added.
The outlook for the Chinese property market is not encouraging. Property sales in the top 30 Chinese cities plunged 31 per cent in September from a year ago, according to Macquarie's estimates.
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