(Reuters) -Road King Infrastructure said on Thursday it has decided to suspend payment of all of its offshore debt obligations and it would explore a restructuring for its offshore debt.
Road King, a small developer that earns the majority of its revenue from mainland China, did not pay the $11.3 million dollar coupons for its 2029 bond by the 30-day grace period which expired on Tuesday, making it the first Hong Kong developer to default on a bond since the China property crisis that started in 2021.
Its shares plunged 10.1% after the announcement, while its 2028 notes were bid at 23.688 cents on the dollar, down from 25.4 cents a day earlier, according to Duration Finance data.
Property markets in mainland China and Hong Kong have been under pressure in recent years, with plunging sales and tightening liquidity. On the mainland in particular, many companies have defaulted despite repeated government attempts to revive weak consumer demand.
Road King’s default could deepen contagion risks for the Chinese-controlled territory and further shrink the high-yield bond market for property firms.
In a filing on Thursday, the developer said its offshore indebtedness, which includes both bank lending and bonds, stood at $1.51 billion, and overdue interest payments amounted to $22.6 million.
“In light of the challenges that the group is facing, the company has concluded that it should immediately explore a holistic solution to the current situation to secure the long-term future of the company for the benefit of all of its creditors and other stakeholders,” the developer said.
(Reporting by Nichiket Sunil in Bengaluru and Clare Jim in Hong Kong; Editing by Janane Venkatraman and Stephen Coates)
