Developer Aoyuan shares tumble after creditors demand $ 650 million
What’s new: The Hong Kong-listed shares of China Aoyuan Group Ltd. closed 11% lower on Friday, a day after the real estate developer said his creditors demanded repayment of $ 651.2 million.
In stock deposit Thursday, Aoyuan attributed the demand to a series of downgrades, warning shareholders that she may not be able to repay her debts due to liquidity issues.
The world’s three major credit rating agencies – S&P Global Ratings, Fitch Ratings and Moody’s Investors Service – have all downgraded their Aoyuan rating in the past two months, activating conditions under which some offshore loans became immediately due, according to the file.
The Guangzhou-based company said there could be a “significant negative” impact on its business if it was unable to repay loans or come to an agreement with creditors.
Aoyuan’s inability to repay offshore loans could eventually lead to default, as foreign creditors generally tend to act in accordance with agreements and are unwilling to extend the debt repayment period, Caixin Huang told Caixin. Lichong, co-founder of Synergy Solution Management Group.
The background: Thursday’s announcement comes as some of China’s major real estate developers face liquidity crises that have fueled fears among creditors that they will be unable to repay their debts.
Guangdong Provincial Government Friday summoned The chairman of the China Evergrande group, Hui Ka Yan, decided to send a task force to the debt-ridden developer to help him “solve his risks, improve his internal risk management and keep his normal business activities” .
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