Sunac China’s debt restructuring adds new variables as it faces liquidation petitions abroad while sprinting towards a domestic plan

[Bloomberg] -- Sunac China is once again at a crossroads in its efforts to escape difficulties through debt restructuring: while the company's domestic debt restructuring plan has not yet been fully approved by bondholders, it has received a winding-up petition offshore, and the offshore debt restructuring plan previously approved by the court is also facing uncertainties. Domestically, Sunac's voting on a debt restructuring proposal involving over RMB 15 billion is still ongoing. According to informed sources, among the 10 fixed-income securities involved, the "16 Sunac 07" bond has not yet passed the vote, and the grace period for the repayment arrangement of principal and interest for this bond, due on December 9, 2024, ends on January 21 of this year. Offshore, Sunac will face a winding-up petition hearing in Hong Kong in March this year, which may lead creditors to demand accelerated repayment of related debts or take enforcement actions. The company expects to be unable to meet other offshore payment obligations on time and does not rule out seeking a more comprehensive offshore debt solution. The Chinese government has introduced several measures to rescue the real estate market, including interest rate cuts. However, the economic recovery is slow, consumer confidence is lacking, and major property companies are still experiencing sluggish sales, making it difficult for companies like Sunac to directly benefit from the currently implemented supportive policies. As one of the earlier entities among China's distressed property companies attempting to reduce debt through restructuring, Sunac's debt restructuring has not progressed smoothly to date, with its stock price falling about 70% from its peak in October last year. Market focus is on whether the company can successfully cope with the ensuing lawsuits and debt repayment pressures. Bloomberg industry analyst Kristy Hung pointed out in a research report that if there is no fundamental recovery in sales in China's real estate market to improve liquidity for property companies, Sunac's debt plan may be "futile." Homebuyers may shy away from Sunac's pre-sales due to concerns about unfinished properties, and its cash shortages are affecting project completions, with the completion volume in the first half of the year down 51% compared to a year ago. In May 2022, Sunac defaulted on its bonds after failing to pay interest on dollar bonds before the grace period expired; over the following year and a half, the company held multiple meetings and ultimately reached an offshore debt restructuring agreement with creditors—becoming one of the faster entities to complete offshore restructuring among distressed property companies. Bloomberg industry research analyst Daniel Fan stated that policies such as business operation loans introduced in China are mainly aimed at helping developers holding investment properties, as these properties can be used as collateral. "However, most developers in mainland China, including Sunac, focus on real estate development. These policy supports will not benefit these companies." A representative of Sunac China declined to comment via phone. Key Dates January 21: According to informed sources, the domestic debt in Sunac's domestic debt restructuring that has not yet been approved should have a repayment arrangement for principal and interest due on December 9, 2024, with the grace period ending on January 21, 2025. March 19: The Hong Kong judiciary's website shows that the company's winding-up petition hearing is scheduled for March 19, and the petition was filed by China Cinda Hong Kong Asset Management Company March 30: According to Bloomberg, the company needs to pay approximately $60 million in cash interest on its restructured dollar notes before the end of March. September 30: In 2023, Sunac China divided part of its offshore debt into six groups, with Group A's $500 million notes maturing on September 30. The maturity date of these notes can be extended by one year. --Joint report by Lorretta Chen. More stories like this are available on bloomberg.com ©2025 Bloomberg L.P