HONG KONG—Chinese developer Zhongliang Holdings is scrambling to secure bondholder approval to extend the repayment on notes worth $729 million ahead of a key deadline next week, joining peers desperate to avoid offshore debt defaults.
The Shanghai-based company has struggled to sell enough houses amid a sustained property downturn in China or secure refinancing to pay investors who are due full redemption on their bonds in May and July.
A bond default by Zhongliang would deepen investor worries about China’s property sector as Beijing seeks to shore up confidence in the wider economy.
Even if Zhongliang gets approval to extend by another year, the developer, reeling under a cash crunch, would need to pay an additional $1.25 million on its bond coupons now due to a weaker yuan. For other cash-strapped issuers with heavier debt burdens, additional repayment costs due to the currency swing could be much larger.
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