Ronshine China Holdings Defaults on $700M Offshore Bond

Mainland developer Ronshine China Holdings has defaulted on its third set of offshore bonds in a little over three months after failing to pay off a $700 million note that matured this week.

The Singapore-listed bonds carry a coupon rate of 8.75 percent and have an aggregate principal amount of $688 million. The principal amount plus accrued and unpaid interest totalling $718.1 million became due and payable on 25 October, Fuzhou-based Ronshine said Tuesday in a filing with the Hong Kong stock exchange.

“As of the date of this announcement, the company has not made such payment,” chairman Ou Zonghong said in the filing.

Ronshine plans to actively engage with its creditors and seek an overall solution to the relevant debts, while also maintaining stable operations at the midsize builder’s projects in an effort to protect the interests of all stakeholders, Ou said.

Missed Payments Pile Up

The latest default comes after Ronshine revealed in July that it had failed to make interest payments totalling $27.9 million on two sets of offshore bonds with a combined outstanding principal of $726 million.

Ronshine missed a 9 June deadline for a coupon payment of $12.8 million on a $316 million bond maturing in June 2023, and the 30-day grace period for that deadline came and went without payment. Similarly, Ronshine did not make a $15.1 million payment as scheduled for 15 June on a $410 million bond maturing in December 2023.

In the wake of those defaults, Moody’s Investors Service lowered Ronshine’s corporate family rating by three notches, from Caa1 to Ca, and dropped the company’s senior unsecured rating to C — the agency’s lowest bond rating.

“The downgrade reflects our expectation of weak recovery prospects for Ronshine’s bondholders after its default on interest payments,” Moody’s analyst Alfred Hui said at the time.

Lengthening List

Ronshine’s July news came shortly after Shimao Group failed to pay off a $1 billion offshore bond. The Shanghai-based developer owed more than $1.02 billion in principal and unpaid interest on the bond that matured on 3 July.

The Shimao default followed closely behind the disclosure that another Shanghai-based developer, Jingrui Holdings, had missed interest payments totalling $59.3 million on four sets of offshore bonds.

Since then, two more mainland developers have added to the lengthening list of defaults, with Shenzhen-based Logan Group halting payments on five sets of offshore bonds with a combined issuance size of $1.6 billion, and Shanghai-headquartered CIFI Holdings acknowledging that it defaulted on a payment on a HK$2.5 billion ($318 million) convertible bond due on 8 October.