Another of China’s struggling property developers, Shimao Group Holdings, experienced its largest bond rout ever on Thursday after China Credit Trust declared one of the developer’s units to have defaulted on a loan, reports Caixin. The Shimao unit failed to pay RMB 645 million ($101 million) of a total of RMB 792 million due by December 25, according to a notice sent to investors by the credit firm. The trust firm had demanded early repayment by December 25 after the developer failed to meet installment requirements, according to the notice.
The firm’s 4.75% note due July slumped 25.1 cents on the dollar to 45 cents. That capped what had already been a bad day for the broader market for Chinese developer notes, after junk-rated dollar securities fell 1–2 cents.
Long considered one of the healthier builders, Shimao Group until recently appeared largely unscathed even as junk-rated rivals including China Evergrande Group and Kaisa Group Holdings defaulted. The plunge in Shimao bonds is likely to stoke fears of financial contagion in a sector that accounts for about a quarter of output in the world’s second-largest economy.