developer Sunac in case of non-payment

The company was due to pay $29.5 million last month but failed to meet the deadline.

In the red: Sunac, one of China’s leading real estate developers, defaulted on Thursday less than six months after national giant Evergrande. Real estate and construction, which make up more than a quarter of China’s GDP, have long served as the engine of the economy and played a key role in the recovery from the first wave of the epidemic in 2020. But to reduce the debt of the sector, Beijing has tightened the conditions for access to credit for developers. As a result, since last year many bands have run out of money, including the number one sector Evergrande.

The poor financial condition of this mastodon has indirectly hurt its competitors as buyers are increasingly hesitant to invest in the stone. The current health situation, which is leading to travel restrictions and even incarceration and affecting the purchasing power of the Chinese, is also adding to the pressure on the sector. Sunac was due to pay $29.5 million (€28 million) in interest on the loan last month but failed to meet the deadline. The group had a 30-day grace period that ended on Wednesday. At the time, Sunak had “not refundedamount, the group said Thursday in a statement on the Hong Kong Stock Exchange, where it is listed.

63 billion yuan contract

Real estate is going throughradical changes“which led to Sunac’s”significant drop“Sales from the second quarter of 2021 and access to new financing”Harder and hardera group from Tianjin admitted. Sunac is the biggest Chinese promoter that defaulted this year. Three more grace periods expire at the end of the month. But the group had already warned that they could not honor them. Sunak says he wants to decide”within a reasonable time» financial problems with creditors.

In a generally sluggish real estate market, the group reported a drop in sales of about 65% year-on-year in March and April. In 2019, at its peak, Sunac had over 50,000 employees. Two years earlier, the firm had acquired hotels and tourist facilities from the Wanda conglomerate, a compatriot then pinned down by Beijing for its frenetic overseas shopping and debt. For this deal, presented by the press while “contract of the centurySunac spent 63 billion yuan (8.8 billion euros at current exchange rates).

This total investment is reminiscent of Evergrande’s investment, which, in addition to real estate, has seen growth potential in tourism, digital technology and even electric vehicles. But last year the group found itself strangled by a huge debt of around 260 billion euros. And he was unable to get a refund by trying elsewhere to rent apartments already paid for by buyers. In December 2021, the Fitch rating agency declared the group defaulted. To get its head above water, Evergrande has been trying to sell assets and reduce its stakes in other companies in recent months. Thus, in March, the group sold for 3.6 billion yuan (510 million euros) a vast real estate project in Hangzhou (eastern China). Threatened by sluggish growth and health restrictions weighing on its economy, the Chinese authorities are smoothing corners with a sector that has been under pressure for months. Thus, Beijing gave support to real estate at the end of April and called for healthy development of the sector at a time when several cities are waiving certain regulatory restrictions.