Greenland Buys Back $50M Offshore Bonds Amid Sharp Fall in Bond Prices; Wiring Funds Tomorrow to Repay $460M Notes Due Feb. 12

Shanghai-listed state-owned property developer Greenland Holdings recently bought back close to $50 million of its offshore bonds and plans to repurchase more amid a sharp fall in the company’s bond prices, said two buysiders briefed by Greenland and a source familiar with the matter.

The offshore bonds have recovered around 2 points as of this afternoon, Feb. 9, after having fallen three to 15 points across the curve last week as sentiment for property developers with tight liquidity, such as Greenland, Sichuan Languang Development and RiseSun Real Estate, significantly weakened due to contagion from the debt crisis of China Fortune Land Development, the buysiders said. Continue reading for our Asia Core Credit team's update on Greenland Holdings buying back its offshore bonds and request a trial for access to our analysis and reporting on hundreds of other stressed, distressed and performing credit restructuring situations in the region.

Greenland’s due 2022 notes were indicated in low to high 80s while those maturing beyond 2022 were indicated in the high 70s, according to the sources.

The company also told investors that it had set aside sufficient funds which will be remitted tomorrow to repay its $460 million 5.25% notes due Feb. 12, the buysiders said, citing a message sent to investors.

As reported, Greenland’s management previously said that it would use its cash on hand, generated predominantly through offshore contracted sales, to repay the due February notes as well as the RMB 1.5 billion ($233.1 million) 7.125% dim sum bonds due March 20.

In response to market volatility, Greenland said in the message that operations remain normal and it continues to have a good relationship with bank lenders, adding that the company accelerated its deleveraging plan and now targets to meet one of the government’s “three red lines” for property developers in the first quarter and one more by the end of this year.

The Shanghai-listed developer previously guided investors with a target to increase its cash to short term debt ratio to above one time in the first half of 2021 by refinancing short term debt and collecting $1 billion cash from offshore projects, and further meet the net gearing ratio requirement by mid 2022 and the debt to asset ratio by mid 2023.

Greenland, which is already under pressure to deleverage in line with the new government policy, is also being closely watched by the market as the company has yet to make any progress in introducing a strategic investors since its Shanghai state-owned controlling shareholders put up a 17.5% stake for sale in July last year, the buysiders noted.

Greenland’s management previously guided that the new shareholders are likely to be central government-owned financial institutions while more progress would be made after the Chinese new year holiday. It also dismissed a rumour last month that the state-owned developer would be acquired by a consortium between another major property developer Vanke and central state owned enterprise China Chengtong Holdings.

Greenland reported last month a 12.4% year-over-year growth in operating revenue for 2020 to RMB 481.296 billion. Contracted sales declined 7.7% to RMB 358.353 billion while contracted sales area also fell 10.7% to 29.1 million sq.m.

Below is the capital structure of Greenland Holdings: