Zhuhai official pledges support for Huafa Group after bond selloff
Zou Hui, director of the Zhuhai State-owned Assets Supervision and Administration Commission, said the city has provided over 40 billion yuan to troubled state-owned conglomerate Huafa Group and plans to coordinate 70 billion yuan more in financing. Huafa failed to repay two trust products and sough
The city government of Zhuhai has expressed its "full support" for troubled state-owned conglomerate Zhuhai Huafa Group, with a senior official saying more than 40 billion yuan ($6 billion) in funding has already been delivered, according to a report by the 21st Century Business Herald on Thursday.
Zou Hui, director of the Zhuhai State-owned Assets Supervision and Administration Commission, told the newspaper that the city plans to coordinate an additional 70 billion yuan in financing. "We have the confidence and determination to jointly respond well to the current challenges," Zou was quoted as saying.
Last week, Chinese media reported that Guangdong province-owned Huafa, whose businesses include real estate and urban development, failed to repay two maturing trust products and was seeking extensions on some bank loans. That led to a sharp selloff in its bonds and shares on Friday, which also hit the wider Chinese corporate and government bond market.
Huafa Group Chairman Guo Jin said in the same interview that the company had repaid the principal and interest on several bonds on time over the past week. Guo added that the company is accelerating property sales and will liquidate idle land assets, and that diversified businesses including property services and tourism projects were generating stable cash flow.
Numerous Chinese property firms have defaulted on their debt or have had to restructure payments amid a liquidity crisis that has engulfed the sector since 2021. Huafa's credit woes are notable because it is a state-owned enterprise, a category of developer that had been widely regarded as more insulated from the crisis.
China Lianhe Credit Rating said on Wednesday that it had placed the group on a negative watch list, citing its persistent losses and a sharp decline in its ability to generate cash from operations. Huafa Properties, the group's listed real estate unit, jumped roughly 5 per cent in early trade on Thursday but remains down 25 per cent over the past 30 days.
Zhuhai Huafa's onshore bond due in 2029 rebounded 17 per cent to 85 yuan in early trade on Thursday but remains below levels of about 100 yuan last week. The company and the Zhuhai city government did not offer immediate comment when contacted by Reuters.