"Jumbo Fortune Dollar Bonds, Once in Default, See Maturity Extended by Over Three Months"

[Image source=Reuters Yonhap News]

[Asia Economy, reporter Kim Suhwan] The maturity date for the dollar bonds of Jumbo Fortune, a partner of China’s second-largest real estate company, Evergrande, which is facing bankruptcy with over 300 trillion won in debt, has been extended just over two weeks after a default was declared earlier this month.

According to major foreign media outlets on October 21, the maturity date for Jumbo Fortune’s bonds, totaling $260 million (approximately 300 billion won), has been extended by at least three months.

Previously, the maturity for the $260 million dollar bonds issued by Jumbo Fortune, a company listed on the Hong Kong Stock Exchange, came due on October 3. As a result, a default was declared on these bonds.

Evergrande Group is included as a guarantor for these bonds.

The news of the maturity extension for Jumbo Fortune’s bonds came just two days before the October 23 deadline for Evergrande’s dollar bond interest payment.

If Evergrande fails to pay the bond interest by October 23, an official default will be declared. In particular, Evergrande, which has been attempting to sell stakes in its subsidiaries to overcome its liquidity crisis, saw its deal to sell a 50.1% stake in its property management arm, Evergrande Property Services, to real estate developer Hopson Development fall through the previous day.

With Evergrande’s funding plans facing setbacks, concerns have grown that the company may not be able to pay the bond interest by October 23, making the risk of default a reality.

Amid these concerns, Evergrande shares, which resumed trading on the Hong Kong Stock Exchange from this day, opened with a sharp decline of around 10%.

As Evergrande’s bankruptcy risk intensifies, concerns are mounting that it could trigger a domino effect across the entire Chinese real estate sector.

The previous day, Sinic Holdings, ranked 41st in China’s real estate industry, failed to pay interest by the October 18 deadline for its dollar bonds, resulting in a default. On October 5, another real estate company, Fantasia, also officially defaulted.

Modern Land, another real estate firm, announced that it has suspended negotiations with investors on extending the maturity of its dollar bonds, which are due on October 25, while its shares have been suspended from trading on the Hong Kong Stock Exchange starting today.