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Developer Greenland has been downgraded by S&P Global to "selective default."

Image: Reuters Berita 24 English -  After the Chinese state-backed real estate developer extended the maturity of its $500 million bonds by ...


Image: Reuters

Berita 24 English -  After the Chinese state-backed real estate developer extended the maturity of its $500 million bonds by one year, ratings agency S&P Global downgraded Greenland Holdings on Wednesday to "selective default."

Since the nation's real estate market was engulfed in a financial crisis last year, Shanghai-based Greenland is the first government-backed developer to extend a dollar-bond payment.

The ratings agency stated in a statement, "We consider the transaction as a distressed debt restructuring and tantamount to a default," adding that had the notes not been extended, Greenland probably wouldn't have had the funds and funding options to fully repay the notes at maturity.

Some private developers, such as China Evergrande Group and Sunac China, have already defaulted on some payments, while many have already provided bond exchanges to relieve their liquidity pressures.

Last week, Greenland received bondholder consent to postpone by one year, until June 25, 2023, the maturity of its 6.75 percent notes, with an outstanding balance of $488 million.

Greenland still has a sizable amount of offshore debt maturities coming due over the next 12 months, totaling nearly $2.4 billion, according to S&P on Wednesday.

The COVID-19 outbreaks in Shanghai and across the nation, as well as the pandemic control measures, the company claimed in a filing last month, have negatively impacted the group's commercial operations, financial performance, and short-term liquidity.

According to a memo obtained by Reuters, Wu Zhengkui, general manager of Greenland's finance division, told investors that the company was "fully capable" of repaying three other bond tranches due later this year on time because the June payment was only impacted by cashflow issues brought on by lockdowns since March.

On Wednesday, the bond in question traded for 46.6 cents on the dollar as opposed to 46.7 cents the day before.

Shares of Greenland traded in Shanghai decreased by 1.3 percent, while the CSI Real Estate Index fell by 0.9 percent.

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