(Bloomberg) -- Chinese builder Powerlong Real Estate Holdings Ltd. has defaulted on one of its dollar bonds as it struggles with sluggish sales and worsening liquidity.
The Shanghai-based company said it hadn’t made a $15.9 million interest payment on its 5.95% notes due April 2025 as its liquidity position continues to deteriorate, according to a stock exchange filing late Wednesday. The non-payment will result in an event of default under terms of certain offshore bank and other borrowings, based on the statement.
Powerlong said it hadn’t received any acceleration notice for early repayment as of Wednesday. The company has engaged Haitong International Securities Co. as a financial adviser and Sidley Austin as legal adviser to facilitate a dialogue with its creditors, according to the statement.
Powerlong’s 5.95% dollar bond due April 2025 dropped 0.7 cent on the dollar to 7.1 cents Thursday, according to data compiled by Bloomberg.
Powerlong’s default is the latest setback for Chinese authorities seeking to revive the real estate market as a debt crisis heads into a fourth year. Beijing has taken several new steps in recent months to offer developers additional support, including a broad relaxation of down-payment requirements for homes and cuts to some mortgage rates.
That hasn’t been enough to turn things around: The value of new home sales among the 100 biggest real estate companies fell 27.5% from a year earlier in October, according to data published by China Real Estate Information Corp.
Back in July, Powerlong won bondholder approval to complete exchange offers for certain of its dollar bonds. The current default shows that despite the extra time the company won for itself, it’s still facing mounting liquidity pressure as sales remains weak.
(Updates to add bond price in fourth paragraph, industry background starting in fifth)
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