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Twenty distressed Chinese property developers have received approval for their debt restructuring plans since the beginning of the year through early August, resulting in the cancellation of over CNY1.2 trillion (USD167 billion) in liabilities, according to the latest data from a leading industry think tank.
Among those who have completed both domestic and international debt restructuring as of this month are Sunac China Holdings, China Aoyuan Group, and Sino-Ocean Group. This information was compiled by analyzing data from approximately 60 troubled developers outlining their progress on debt restructuring and corporate reorganizations.
Other companies such as Shimao Group Holdings, Greenland Holdings Corporation, and Country Garden have also had their offshore restructuring plans approved.
Current efforts by developers are increasingly centered around practical strategies, including cash buybacks, extending debt maturities, and executing debt-for-equity swaps. The aim is to avoid the setbacks experienced by companies that rushed their restructuring efforts prematurely. Many of these firms later faced renewed crises due to underestimating the severity of the property downturn, leading to additional bailout negotiations.
For example, Guangzhou R&F Properties was the first real estate firm to secure extensions for all of its onshore and offshore debt at the end of 2022 but encountered difficulties again last year. Similarly, Modern Land restructured its overseas debt in 2022 and agreed to roll over domestic debt; however, the Beijing-based company has since defaulted once more.
Most struggling developers are severely cash-strapped, and with many assets either devalued or used as collateral, there are limited high-quality assets available to settle debts, according to the research organization CRIC. As a result, debt-to-equity swaps have become the go-to approach for developers seeking to restructure, primarily to significantly reduce overall debt levels—generally aiming to cut debt by around 70 percent.
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