by THO
Agile Group Holdings Ltd., a Chinese developer of villa apartments and high-rise homes, defaulted for the first time on publicly issued dollar bonds, underscoring lingering distress amid the nation’s unprecedented property crisis.
The company, based in the southern province of Guangdong, hasn’t paid interest within a grace period that ended May 13 on dollar bonds due 2025, it said in a filing. The builder will engage an external financial adviser and legal adviser to assist in evaluating the capital structure and liquidity.
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Investors had been bracing for such an outcome, with the notes trading at deeply distressed levels around 9 cents on the dollar. The stumble adds to record defaults among Chinese property developers, flagging the long road to recovery even as recent policy steps to support the housing industry have sparked rallies in builder shares and bonds. Some analysts have voiced skepticism as to whether the wave of stimulus measures could lift sales.
Agile’s default also marked the downfall of one of the few survivors among China’s private-sector builders. The list of major private developers that have yet to default on public bonds has dwindled since last year, after the delinquency of Country Garden Holdings Co.
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The real estate industry “continues to experience a downward trend,” Agile said in its filing.
Like many builders in China, Agile often sells homes before they are completed. Pre-sales of homes for the four months ended April 30 fell 68% to 6.55 billion yuan compared with the year-earlier period, it said. The firm is considering all possible actions to address its debt issue, it added.
With total assets of more than 240 billion yuan as of the end of last year, Agile has established a presence in more than 200 cities in China and abroad and employs over 100,000 staff members, according to its website.
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Some holders of the 6.05% dollar notes due 2025 said Monday they hadn’t received the interest payments, as the 30-day grace period neared its end. The bond’s offering circular defines an “event of default” when non-payment of interest continues for a period of 30 consecutive days.
