Ronshine China Holdings Defaults on $726M in Offshore Bonds

Ronshine China Holdings has failed to make interest payments totalling $27.9 million on two sets of offshore bonds with a combined outstanding principal of $726 million, putting the mainland developer at risk of accelerated redemption.

Ronshine missed a 9 June deadline for a coupon payment of $12.8 million on a $316 million bond maturing in June 2023, the company said Sunday in a filing with the Hong Kong stock exchange. 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. That obligation also has a 30-day grace period.

If non-payment on the Singapore-listed bonds continues, holders of at least 25 percent of the aggregate principal amount may require immediate payment of the principal and accrued interest, according to Fuzhou-based Ronshine.

“The group regrets that it is not able to guarantee the performance of obligations of the debts as scheduled, hoping that such creditors will give the group certain buffer time to solve the current funding issues,” Ronshine chairman Ou Zonghong said in the filing. “The group intends to engage external advisors to explore various feasible solutions with overseas creditors, so as to seek a holistic solution to the relevant debts.”

Pandemic Pressure

Ronshine said the recent outbreak of COVID-19 in Shanghai and other cities had brought “enormous pressure” on the group’s operations. According to the filing, Ronshine’s contracted sales for the first six months of 2022 fell by 53 percent year-on-year to RMB 38.7 billion (now $5.8 billion).

“In light of its current liquidity position, the group cannot guarantee that it will be able to perform repayment obligations of the interest on senior notes mentioned above and other senior notes when they fall due or within the relevant grace period,” Ronshine said.

The developer had successfully redeemed offshore bonds totalling $700 million in February and March of this year, but it faces a $700 million bond maturing this October.

In March, Fitch Ratings downgraded Ronshine’s long-term foreign-currency issuer default rating and the developer’s dollar-denominated senior notes to CCC from B-. The agency cited uncertainty over Ronshine’s liquidity position and funding access after the resignation of auditor PwC and a delay in publication of the company’s 2021 annual results.

Fitch withdrew its ratings in April after Ronshine ceased to participate in the rating process.

Asset Sales and More

In Sunday’s filing, Ronshine said it had taken measures to ensure stable operations and improve liquidity, including strengthening sales and cash collection, expanding diversified financing channels, reducing operating costs, negotiating for extensions of existing debts and disposing of certain assets.

The company announced in February that it had sold its 55 percent stake in a residential joint venture in Ningbo with Hangzhou-based Zhejiang Hailiang Group for RMB 421.2 million ($66.5 million).

Ronshine’s latest news came one week 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 the disclosure two weeks earlier that another Shanghai-based developer, Jingrui Holdings, had missed interest payments totalling $59.3 million on four sets of offshore bonds.

Also in June, S&P Global Ratings downgraded Greenland Holding to “selective default” after the government-backed builder obtained a one-year extension of a $500 million bond due on 25 June. S&P then upgraded Greenland to CCC a few days later.