Chinese real estate developer faces debt payment deadline
Major Chinese real estate developer, Zhenro Properties, faces debt payment deadline today.
Zhenro officials have stated that the Shanghai-based developer will be unable to pay off a $290 million debt payment due today because of tight liquidity and continued real estate market woes throughout China.
The company is actively working to restructure their offshore debt in hopes of saving themselves from further defaults.
Zhenro’s issues are very reminiscent of the collapse of Evergrande, China’s notorious deeply indebted real estate development company that was ordered to be liquidated after multiple payment failures and defaults.
The real estate market in China is in dire straits, as the country attempts to cope with the unsustainable design of its real estate development companies. Zhenro’s failure to pay it’s debt will start a steep downward slope towards total liquidation. Zhenro’s situation will worsen, especially if Evergrande is any example of debt woes in the Chinese economy. Though China has successfully contained some of the damage from previous collapses with new borrowing measures, Chinese banks will still take active losses due to the default, and foreign investors will continue to back out of the real estate market due to obvious high risks.
