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Chinese developer misses payment, adding to industry strain

Some Chinese developers are struggling to repay debt after regulators tightened limits last year on their use of borrowed money.

Published: 05th October 2021 01:52 PM  |   Last Updated: 05th October 2021 01:57 PM   |  A+A-

A security guard walks by a map showing Evergrande development projects in China at an Evergrande new housing development in Beijing,

A security guard walks by a map showing Evergrande development projects in China at an Evergrande new housing development in Beijing. (Photo | AP)

By Associated Press

BEIJING: A mid-size Chinese real estate developer failed to make a $205.7 million payment due to bondholders Tuesday, adding to the industry's financial strain as one of China's biggest developers tries to avoid defaulting on billions of dollars of debt.

Fantasia Holdings Group announced it missed the payment in a statement issued through the Hong Kong Stock Exchange. It gave no explanation but said it had asked for trading of Fantasia shares to be suspended.

Some Chinese developers are struggling to repay debt after regulators tightened limits last year on their use of borrowed money. That is fueling fears about possible defaults and turmoil in financial markets.

Investors are worried Evergrande Group might collapse with 2 trillion yuan ($310 billion) of debt. The company has missed at least one payment to bondholders abroad but has yet to be declared in default.

Economists say Beijing can prevent a broader credit crunch if Evergrande defaults but wants to avoid bailing out the company or its creditors as a warning to other borrowers and lenders to be more disciplined.

Fantasia, valued by the stock market at $415 million, reported a 153 million yuan ($24 million) profit for the first half of 2021 and said revenue rose 18.5% over a year earlier to 10.9 billion yuan ($1.7 billion).

Hundreds of smaller Chinese developers have gone bankrupt since regulators began tightening control over the industry's financing in 2017 amid concern about rising debt and the possible risk of a financial crisis.

In March, another developer, Fortune Land Development Co. said it missed interest and debt payments totaling 5.3 billion yuan ($813.5 million).



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