Under-construction apartments are pictured from a building during the sunset in Shekou area of Shenzhen, Guangdong province, China, November 7, 2021. REUTERS David Kirton
SHANGHAI, Jan 12 Reuters -- Property firms that are controlled by developers Shimao Group Holdings, Kaisa Group Holdings and Greenland Group have been named and shamed by a list of Chinese companies that are overdue on commercial paper payments.
According to the list released by the Shanghai Commercial Paper Exchange, the total number of delinquent firms increased by 26% in December from the previous month.
The spike in defaults on commercial paper, a popular short-term debt instrument that Chinese developers use to delay payment to suppliers, shows sustained liquidity stress in the real estate sector despite some policy easing.
The list also contains increasing number of defaults by construction material suppliers and decoration companies, suggesting that developers' debt troubles could be spreading.
A total of 484 companies were overdue on at least three commercial paper payments during the August 1 to December 31 period, according to the list published on the exchange's website.
The December total was 100 more companies than in November, and 95 were in the real estate sector, or nearly one-fifth of the total.
Four of the names are project companies of the developer Shimao Group 0813. After a default on a trust loan last week, HK is talking about payment arrangements with creditors. The list, which does not disclose financial figures, also includes real estate firms controlled by Kaisa Group 1638. According to an analysis of the firms by Reuters, HK is struggling to repay investors.
Companies controlled by Greenland, Risesun Real Estate Development Co 002146. SZ China Grand Enterprises CGE Zoina Group and Seedland are also on the list.
Shimao and Kaisa didn't respond immediately to requests for comment, and Greenland declined to comment. Risesun, Zoina, Seedland and CGE could not be reached for comment.
The CSI 300 Real Index CSI 000952 fell by 1% on Wednesday morning after dropping as much as 3.2%, while the Hang Seng Mainland Properties Index lost 1.4%.
Property bond performance was mixed, with a Shimao bond slumping 18% in Shanghai.
In 2021, China's commercial paper market was under scrutiny with regulators demanding greater disclosure as part of efforts to rein in ballooning debt in the property sector. Commercial paper, which is not counted as interest-bearing debt, became a source of funding for developers locked out of other financing channels.
China Evergrande Group 3333. HK, the world's most indebted developer struggling amid a debt crisis, owes more than 200 billion yuan $31.42 billion in commercial paper.