Investor confidence in China Fortune Land Development is tumbling as concerns grow about its debt repayment abilities just as Beijing steps up efforts to cut risk in the real estate sector, reported Bloomberg.
The mid-sized developer’s dollar bonds fell to record lows earlier Tuesday, with some rebounding but a note due 2024 still down at 49.8 cents on the dollar at 5:23 p.m. Hong Kong time, Bloomberg-compiled prices show. The bond was quoted at around 86 cents at the end of last year. Losing 3.2% Tuesday, the developer’s shares have sunk 48% in the past 12 months, making it the worst performer on the CSI 300 Index.
Beijing is tightening controls on the industry’s financial risks after years of aggressive borrowing. That’s sent some of China Fortune Land’s dollar debt to distressed levels even after the company’s parent wired funds to pay a combined RMB 1.4 billion ($216 million) of early redemptions due Monday for two onshore notes.
“There’s concern the firm could be the first casualty of Beijing’s policy-tightening focus,” said Owen Gallimore, head of credit strategy at Australia & New Zealand Banking Group in Singapore. “It is a lightning rod for the policy restrictions and deleveraging fears, such as the three red lines policy that curbs developers’ debt metrics, and the bank lending restrictions.”