Fantasia has been unable to make payments after the Evergrande crisis. The debt crisis of companies operating in the real estate sector in China is growing.
Chinese real estate development company Fantasia Holdings Group missed the payment date for its dollar-denominated bond. This has exacerbated the challenges for the country’s heavily indebted real estate firms.
Fantasia said late Monday that it has failed to repay the $205 million bond that was due on Monday. Fantasia’s other bond for December delivery tumbled nearly 30 cents early Monday as concerns over the company’s ability to pay even in the short-term increased.
The management and board of directors of the Shenzhen-based firm said “We will assess the potential impact of the missed payment on the Group’s financial position and cash position,”
International credit rating agency Fitch Ratings joined other peers in the same direction, downgrading Fantasia’s credit rating by a few notches to CCC-, well below investment grade, on Monday. S&P Global Ratings downgraded the company’s credit rating from B to CCC on September 29. Moody’s Investors Service also downgraded the company’s rating one notch to B3.
Last week, Fantasia denied that the funds were not transferred, announcing that it had paid the principal and interest of its $100 million privately-appointed bond.
Evergrande’s Risk of Spreading Increases
Signs of stress in China’s real estate sector are spreading as low-rated real estate development companies face bond yields soaring to 10-year highs. Evergrande, the world’s most indebted real estate development company, is on track to become one of the country’s largest restructurings, raising concerns that the crisis will spread across markets.
In China, the government continues its strict rules on leverage, while measures to cool the housing market are causing sales to decline. In recent days, there are signs that other real estate companies are also having difficulties.