[Asia Economy Reporter Hyunwoo Lee] Chinese real estate developer Wuzhou Group has announced that it will be unable to repay dollar-denominated bonds worth more than 120 billion KRW, signaling a default.
According to the Hong Kong South China Morning Post (SCMP) on the 24th, Wuzhou Group, listed on the Hong Kong Stock Exchange, disclosed that it is unable to pay principal and interest on two matured dollar bonds. One of the defaulted bonds matured on the 23rd, and the other will mature on the 25th.
Wuzhou Group previously proposed exchanging (refinancing) dollar bonds with new bonds earlier this month, and most investors accepted the offer. The bonds now in default are those dollar bonds for which creditors did not apply for the exchange, amounting to 104.9 million USD (approximately 125 billion KRW).
In its disclosure, Wuzhou Group stated, "A default will occur on these two bonds," but added, "Other bonds are not related to this default." It also emphasized, "We intend to make another refinancing offer to bondholders and maintain active dialogue with them." According to Bloomberg's tally, the total dollar bonds Wuzhou Group must repay amount to 5.7 billion USD.
The bond exchange conducted by Wuzhou Group has been used as a means for Chinese real estate developers to avoid defaults. As concerns over China's economic downturn grow and real estate companies face operational difficulties, there are worries that similar default cases will increase.
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