Chinese developer Languang Development slips on bond default

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By Clarence Leong

Shares of Sichuan Languang Development Co. are at their lowest for nearly a decade after the company defaulted on a bond and announced overdue debt of more than $ 700 million, the latest sign of unrest in the market. highly indebted real estate development sector in China.

The Sichuan-based company has not repaid 967.5 million yuan ($ 149.4 million) in principal and interest owed on a 2019 medium-term bond that matured over the weekend, he said. -said Tuesday in a document filed on the Shanghai Stock Exchange. Including bank and trust loans, the company has outstanding debt of CNY 4.54 billion, he said.

Languang Development said it has faced refinancing difficulties in the public market since the end of 2020, as the recovery in operating cash flow has slowed and some financial institutions have advanced due dates of the debt.

On Tuesday, S&P Global Ratings downgraded the issuer’s long-term credit rating, saying it expects non-payment of the bonds to lead to a general default, as it triggers cross defaults and demands. accelerated repayment on other debts.

Languang Development’s Shanghai-listed stocks briefly dipped in morning trading to CNY 2.70. Stocks closed below that level in 2010. Stock was recently down 0.4% to CNY 2.74, losing 41% so far this year.

A tight credit environment and slower sales growth weighed on the real estate sector in China. Developers such as Sunshine 100 China Holdings Ltd., Oceanwide Holdings Co. and China Fortune Land Development Co. have defaulted on their debts this year.

Languang Development said it is discussing solutions and looking to raise funds, adding that it has substantial support from the local government to design medium and long-term plans.

Write to Clarence Leong at clarence.leong@wsj.com


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