China commercial paper delinquencies rise as real estate developers struggle

Apartments under construction are photographed from a building at sunset in the Shekou area of ​​Shenzhen, Guangdong province, China on November 7, 2021. REUTERS / David Kirton

SHANGHAI, Jan. 12 (Reuters) – The number of Chinese companies “still behind” on commercial paper payments jumped 26% in December from the previous month, as cash crunch hit Chinese real estate developers reduced their ability to repay their debt.

A total of 484 companies were behind on at least three commercial paper payments between August 1 and December 31 last year, according to the Shanghai Commercial Paper Exchange.

December’s total was 100 more companies than in November, and included 95 in the real estate sector.

Four of the names are project companies from developer Shimao Group Holdings (0813.HK), which is discussing payment terms with creditors after announcing a default on a fiat loan last week. Read more

China’s commercial paper market has come under renewed scrutiny in 2021, with regulators demanding more disclosure as part of efforts to curb rising real estate debt. Read more

Commercial paper, which is not counted as interest-bearing debt, is commonly used in the real estate industry as debt that promises suppliers future payment on a fixed date, usually within a year, but it has increasingly become plus a source of funding for locked out developers. other funding channels.

Reporting by Andrew Galbraith and Samuel Shen; Editing by Edwina Gibbs

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