Chinese Developer Jinke Defaults on USD187.6 Million Debt Payment
Wang Yifan
DATE:  May 31 2022
/ SOURCE:  Yicai
Chinese Developer Jinke Defaults on USD187.6 Million Debt Payment Chinese Developer Jinke Defaults on USD187.6 Million Debt Payment

(Yicai Global) May 31 -- Jinke Property Group, which has long maintained the policy of ‘zero default, no extension,’ has become the latest Chinese developer to be ensnared by the sector’s growing debt crisis and has said it will not be able to repay a bond of CNY1.25 billion (USD187.6 million) that matured earlier this week.

The principal and additional interest on the bond, which was due on May 28, will be paid off in regular instalments over the next 12 months, Jinke said yesterday. The private developer, which is based in the southwestern municipality of Chongqing, reached consensus with bondholders on May 27, it added.

If Jinke fails to repay the bond, the firm will fall into a vicious cycle, a company executive told Yicai Global. But there are more challenges to come. The developer has CNY6.9 billion (USD1 billion) worth of domestic bonds due between now and December, CNY1.6 billion (USD240 million) of which will mature in July.

Jinke, which plunged into the red in the first quarter with losses of CNY260 million (USD39 million), will seek to improve its liquidity by taking out more loans from banks, optimizing the firm’s assets and seeking state-owned capital as investors in it or its projects, the executive said. Revenue over the period advanced just 2.2 percent from the year before to CNY12.7 billion (USD1.9 billion).

Jinke was asked by the Shenzhen Stock Exchange earlier this month to explain the deviating trend between its net profit and operating revenue last year. In 2021, the company’s net profit nearly halved from the year before to CNY3.6 billion (USD540.6 million) whereas revenue jumped 28 percent to CNY112.3 billion (USD16.9 billion). The bourse queried the firm's solvency. Jinke was given until June 10 to reply and has yet to respond.

Chinese real estate market, already in a downturn, has been hit hard by a resurgence of Covid-19 in the country this year. Sales among the country’s biggest developers more than halved in April from the same period last year as the latest outbreaks greatly reduce consumer appetite for new property and cause construction to halt in many places.

Editors: Tang Shihua, Kim Taylor

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Keywords:   Deferred Payments,Debt Crisis,Property Developer,Jinko Property