Sunac, one of China’s leading real estate developers, suffered a record plunge on its return to the stock market on Thursday following a year of suspension.
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The group’s share collapsed in the morning by some 59% on the Hong Kong Stock Exchange, for its first day of trading since April 1, 2022.
This collapse rekindles concerns around debt-ridden property developers and the difficult market recovery. In May 2022, Sunac announced that it was in default, unable to repay 28 million euros in loan interest. A situation experienced by many other promoters.
Unable to publish its financial results, Sunac had been suspended from the Hong Kong Stock Exchange. This measure was finally lifted on Thursday. The group presented plans to restructure its debt which amounted to 9.1 billion dollars (8.3 billion euros) in December 2022.
In particular, it plans to convert up to $4 billion of offshore debt into common stock or equity-linked instruments. The rest of the debt is to be converted into new dollar bonds with maturities ranging from two to eight years, with no interest payments for the first two years, according to a document filed with the Hong Kong Stock Exchange.
In March, the developer announced that it had reached an agreement with a group of creditors, but analysts were skeptical regarding the project, believing that Sunac would have difficulty obtaining approval from creditors. Since 2020, Beijing has taken strict measures once morest excessive indebtedness in the real estate sector, which has made access to credit scarce.
Like Sunac, many groups have since found themselves in financial difficulty, including the former heavyweight in the sector Evergrande, on the verge of bankruptcy. These difficulties have been exacerbated by a drop in demand for real estate in China. The crisis deepened in 2022 following buyers, annoyed by construction and delivery delays, suspended payments before the work was even completed.
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