Sunshine 100 China Holdings Ltd, a Chinese property developer, announced Monday that it has defaulted on a $170 million dollar bond because of liquidity problems.
The announcement comes only days after larger rival China Evergrande Group stated that there was no assurance it would be able to satisfy debt repayments.
Sunshine 100 said in an exchange filing that it was unable to repay the principal and interest on a 10.5% bond due Dec. 5 "because liquidity issues resulting from the detrimental impact of a number of variables, including the macroeconomic climate and the real estate market."
The company added that the delinquency would also activate cross default provisions under certain other loan instruments.
In August, the company announced that it would be unable to repay the principal, premium, and interest on its 2021 bonds. Additionally, its default triggers conditions under some other debt agreements.
This year, as regulators tightened down on excessive borrowing in the property business, Sunshine 100 struggled to pay loan obligations.
Sunshine 100 engaged in a distressed repurchase in March that S&P Global Ratings described as "tantamount to default" and failed to repay an August 11 dollar bond.
The developer now has $385 million in outstanding dollar notes, including those with missed payments, data provided by Bloomberg show.
China tightened real estate restrictions earlier this year, worsening Evergrande's and other highly leveraged developers' debt issues and sparking fears that their impending collapse will send shockwaves across the country's real estate market and beyond.
Since October, Chinese regulators have urged banks to loosen lending standards to accommodate developers' typical financing needs and expanded real estate businesses' ability to issue bonds in the domestic market.
China's property market, which by some estimates accounts for 25% of gross domestic product, has been cooling drastically since May, as confidence has been rocked by the deepening liquidity crisis engulfing some of the country's most indebted developers.
Analysts believe Beijing will not ease up significantly on its campaign to rein in developers with excessive leverage, but they do anticipate some regulatory modifications to ensure property prices and sales do not collapse too rapidly.
Regulators said they will assist private enterprises, particularly those impacted by recent financial crises, in raising capital "properly," Xinhua news agency reported Sunday, quoting a securities regulator official.
The broader sector stresses have pushed rates on Chinese junk dollar bonds - of which a large portion originates in the industry - to near record highs. This has hampered troubled developers' ability to refinance ageing loans in the offshore market, contributing to a wave of defaults.
