
CIFI’s house of cards may have already fallen down
CIFI Holdings said on Thursday that it has failed to make payments due on offshore debts, with creditors indicating that it defaulted on a payment on a HK$2.5 billion ($318 million) convertible bond due on 8 October.
A notice from China Construction Bank, which serves as a trustee for the bond’s creditors said that payment was not made on $9.14 million in interest due on the bond, with CIFI blaming the default on China’s weeklong National Day holiday at the beginning of the month. The convertible instrument had no grace period.
“Due to the extended holiday in the Mainland China, the Group has experienced delay in remittance of cash offshore from the Mainland China to meet certain scheduled interest and amortisation payments,” CIFI said in a statement to the Hong Kong exchange on Thursday.
The payment failure by CIFI comes despite lending support provided in recent weeks and was revealed just one day after Fitch Ratings downgraded the Shanghai-based developer’s credit following reports of an onshore default
Rating Slashed, Withdrawn
CIFI said in its statement to the exchange that it has been actively communicating with creditors to address the delays and that its operations remain normal. However, the company also warned the public that it could default on its offshore debt should payment delays persist, and that such a scenario could trigger cross-defaults with other creditors demanding early repayment.

CIFI chairman Lin Zhong has few financial options left (Getty Images)
The Shanghai-based developer, which until recently enjoyed access to state-backed funding, faces rising concerns as Fitch slashed the builder’s rating to CC from BB- Wednesday citing rising uncertainty about the developer’s ability to repay debt on time.
“Fitch estimates that CIFI has large capital-market and syndicated loan maturities of RMB 20 billion ($2.8 billion) in 2023. Liquidity available for debt servicing may be insufficient to address its near term maturity amid market reports that it has failed to service its debt obligations in a timely manner,” said Rebecca Tang, a director and primary rating analyst at Fitch, in a Wednesday note co-authored with colleagues.
Later that day Fitch announced that it was withdrawing its rating for CIFI at the developer’s request, stating that it would no longer have access to information regarding its financials.
The Fitch analysts pointed to rising liquidity risks at the country’s 15th-largest developer amid market reports that said CIFI failed to make an early October interest payment on a convertible bond maturing 8 April 2025.
The Fitch report also acknowledged news reports of CIFI having proposed delaying payment of interest and principal on some of its offshore bank loans.
The ratings agency said it was unable to verify the accuracy of the reports with the developer. That lack of information, the developer’s limited access to the capital market, the unavailability of the bulk of its presale proceeds due to government requirements regarding escrow accounts, as well as its weak contracted sales, triggered the rating downgrade, the credit rating agency said.
Fitch said the CC rating for CIFI was based on expectations that declining sales will continue to hamper the developer’s cash flow, with the ratings agency predicting that full-year contracted sales will drop by 35 percent and that it will be able to manage only minimal acquisition of new land during the remainder of 2022 and in 2023. It has taken in consideration additional information CIFI provided in an appeal action, the agency said.
Fitch’s move follows a parallel action by Moody’s last Thursday when that ratings agency downgraded CIFI to B3 from B2, citing elevated refinancing risks over the next 6-12 months.
Crisis Mode
CIFI’s Hong Kong-listed shares plunged 48 percent in five trading days during the last week of September as reports said CIFI had missed payment on a trust loan to a Tianjin project and the developer confirmed the default.

Rebecca Tang of Fitch Ratings
The developer’s share price has plunged another 28 percent since then, and closed at HK$0.52 Thursday.
In a filing to the Hong Kong stock exchange on 28 September, the developer stated that development and sales of the Tianjin project were affected by the weak market sentiment, which in turn hampered payment of the trust loan.
Holding 31 percent of the Tianjin project company, CIFI said it was “in active discussion” with the financial institution issuing the trust loan to “reach a reasonable solution”.
Govt Support Not Enough
Considered one of China’s more stable developers, and one which had been handpicked by the government for financial support, CIFI’s trust loan default adds another shocking episode to China’s ongoing property default drama.
Along with peers Longfor and Country Garden, CIFI is one of roughly half a dozen homebuilders which recently received government support in raising new debt. Last month, the developer issued RMB 1.2 billion in 3.22 percent three-year medium-term notes due Sept. 22, 2025 supported by a 100 percent guarantee from China Bond Insurance Co.
Besides the onshore issue, CIFI issued a USD 150 million bond in mid-January and a US$250 million convertible bond in April. Also, the company completed a share placement in August, raising approximately HK$630 million.
However, there have been signs of financial strain on the developer as CIFI has frequently disposed of or shifted assets in the past few months.
At the beginning of last month, CIFI agreed to sell its 60 percent stake in a Fortress Hill project with Wang On Properties to a joint venture of Wang On and Dutch fund manager APG for HK$1.34 billion ($170 million).
Also last month, CIFI sold a rental project in Nanjing for RMB 117 million to Lingyu Apartment Management, a company controlled by Lin Zhong, Lin Wei and Lin Feng, the three Lin brothers who founded CIFI.
In July, CIFI sold a rental project in Shanghai for RMB 180 million to Lingyu International, a joint venture where the developer owns 50 percent while the Lin brothers hold 40 percent.
In unaudited operating statistics released last month, CIFI reported that its contracted sales for the first eight months of 2022 totalled RMB 94.3 billion, down 47 percent from a year earlier.
CIFI’s interim report released late last month showed the developer’s net profit declined by 79.7 percent on year to RMB 730.8 million during the first half due to factors including RMB depreciation, a decrease in its share of results of joint ventures, and a decline in gain on investment properties.
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