Chinese real estate giant Shimao Group defaults on debt was unable to pay interest and principal on a $1 billion bond that matured on July 3.
After Evergrande, many other big-name Chinese real estate firms have also defaulted, such as Fantasia or Kaisa.
The problems in this industry are exacerbated by China’s zero covid policy and slowing economic growth.
To revive the real estate market, Chinese authorities have relaxed many regulations on home purchases and reduced mortgage rates.
Real estate companies also come up with ways to stimulate demand, such as accepting payments by garlic, wheat or give pigs to home buyers.
According to documents filed with the Hong Kong Stock Exchange, Shimao Group was unable to pay interest and principal on a $1 billion bond that matured on July 3.
This bond has no grace period. Shimao Group’s default adds to the challenge for the sluggish real estate sector in the world’s second-largest economy.
This is the first time Shimao has been unable to repay bonds issued in USD. The company has been in financial difficulty for months.
China’s real estate sector has faced several consecutive crises since 2020.
At that time, authorities began to tighten lending to real estate companies, in order to curb corporate debt and rising house prices.