Sunac China reaches agreement for additional put option on $633 million bond: Source

Ryan M. Cason

 File photo File photoSHANGHAI: Developer Sunac China Holdings has reached an agreement with investors to add a sell-back date for a 4 billion yuan ($632.66 million) puttable bond due April 2024, a source told Reuters on Thursday.

The agreement comes after Sunac, China’s third-largest developer by sales, said last week that it was proposing giving investors the option to sell the bond back in April 2023, on top of an existing option to sell it back this April 1.

A source with knowledge of the matter told Reuters last week that the company has enough funds in place to redeem the bond on April 1. Analysts say another put date may allow some investors to defer their decision to sell bonds back, relieving some liquidity pressure on Sunac in the short term.

The number of Chinese companies consistently overdue on commercial paper payments more than doubled in February from a month earlier, reflecting an ongoing liquidity crisis in the property sector.

The crunch has walloped developers’ bonds and shares, with many of Sunac’s bonds trading at less than a third of their face value and its shares this week touching their lowest since November 2016.

“We think investors’ concerns on liquidity crunch will linger, and we will not be surprised to see more bond defaults/extensions over the next few months, despite our expectation for more policy easing (which has a lagged effect),” analysts at J.P. Morgan said in a note.


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