What’s new: Real estate services provider E-House (China) Enterprise Holdings Ltd. has defaulted on a $298 million U.S. dollar bond after getting caught up in the financial troubles of several property developers, it said in an exchange filing.
The default on the 7.625% bond, which was due Monday, triggered a cross-default on a $300 million note due in 2023.
Last year, E-House reported an 8.9 billion yuan ($1.4 billion) net loss attributable to shareholders, a reversal from a 304.4 million yuan net profit posted in 2020. The company set aside 6.7 billion yuan last year — up from 172.5 million yuan in 2020 — to help cover expected losses from the delayed payments of certain customers whose credit quality had deteriorated.
The context: The Hong Kong-listed company’s top five customers are all real estate companies. Together they accounted for 36.7% of E-House’s 8 billion yuan in total revenue in 2020, according to its annual report from that year. Its single largest customer was the heavily indebted China Evergrande Group, which contributed 18% of total revenue.
E-House’s stock price has fallen 56% this year, with its shares closing at HK$0.78 (10 U.S. cents) on Wednesday.
Related: Chinese Banks Expand Mortgage Rate Cuts to Bolster Housing Market
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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