- Once China's top property developer Evergrande faces Hong Kong delisting
- Delisting will come after 18-month trading suspension
- Property crisis continues to weigh heavily on China's economy
- Developers debt revamp talks delayed due to lack of recovery
- New defaults and more restructuring rounds expected - advisers
China Evergrande Group looks set to be kicked off the Hong Kong exchange next month after failing to revamp its debt and being pushed into liquidation, with the stubbornly weak Chinese property sector clouding the outlook for debt restructuring by its peers.
China's property market, once a key growth driver for the world's second-largest economy, has been in a multi-year tailspin despite repeated government attempts to revive weak consumer demand.
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The liquidation order came after it failed to provide a viable restructuring plan for its $23 billion offshore debt.
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With Chinese new home prices falling at the fastest pace in 8 months in June, even developers who have completed first round debt revamps are weighing fresh negotiations and those that have not defaulted are also contemplating such a move to slash debt, financial advisers said.
"There's no light at the end of the tunnel," said Glen Ho, national turnaround & restructuring leader at Deloitte, referring to the property market.
"Companies want to delay their restructuring effective date and use time to exchange for more breathing room, but they cannot create new funds out of nothing."
More than $140 billion, or more than 70%, of China property dollar bonds have defaulted since 2021, according to investment platform FSMOne Hong Kong, and the majority of them are still in various stages of being restructured.
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Property construction in China is expected to decline another 30% by 2035 due to structural changes in demand, ANZ analysts said in a June report, which could cast a long shadow over debt restructuring efforts in the near to medium term.
Private developer Country Garden, which defaulted on $14 billion offshore debt in 2023, is still trying to get its lenders' approval on its debt restructuring proposal before the next liquidation hearing on August 11.
Other developers including KWG and Agile have yet to announce detailed restructuring proposals after having started the process in 2023 and 2024, respectively, soon after defaulting on their repayment obligations.
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China's property sector accounted for about a quarter of the country's economic activity before it collapsed.
But despite repeated attempts by authorities to stabilise the market, property investment in China declined 11.2% in the first half of this year from a year earlier, while property sales by floor area fell 3.5% and new construction starts dropped 20%.
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