A company with more significant problems than Evergrande has come to the forefront. Media outlets quoted industry insiders saying that the Shanghai Shimao Group’s crisis was worse than Evergrande’s default.
According to Bloomberg, although Shimao Group’s balance sheet is less than one-third of Evergrande and its sales rank only at 13th among Chinese property developers, Shimao has always been considered a firm with a higher rating. The company also reflects the overall health of China’s real estate market. Previously, credit rating group Fitch Ratings assessed that, in the eyes of investors, Shimao was less likely to default than Evergrande.
Experts pointed out that if Shimao fell into a crisis, international investors might reassess risks in China’s real estate market, which would cause more currently high-ranking Chinese developers unable to obtain capital. Bloomberg analysts pointed out on December 15th that Beijing was expected to loosen restrictions on the real estate industry further.
On the other hand, debt pressure on China’s real estate market continues to widen. On December 15th, R&F Properties Guangzhou confirmed that the company was having difficulty paying its debts. The real estate developer seeks to defer its $725 million payment due in January for the next six months. The firm also proposed to buy back a portion of the bond at a discount of 17% of par value to avoid payment failure.