Fantasia Holdings’ troubles confirm concerns about the financial health of the country’s developers. Meanwhile, the market is still waiting for news from Evergrande, which could announce a “major transaction”

Amid concerns about a possible bankruptcy of Chinese real estate giant Evergrande, another Chinese construction company in financial trouble acknowledged on Tuesday that it failed to meet the payment of a debt obligation.

The medium-sized company Fantasia Holdings did not comply with the repayment of 205.7 million dollars scheduled for Monday , the Shenzhen-based company in southeast China said in a statement.

In addition, the real estate management company Country Garden Services Holdings indicated that a Fantasia subsidiary had failed to repay a 700 million yuan ($ 108 million) loan and pointed to a possible bankruptcy of the developer.

This occurs while the market awaits news from the giant Evergrande , which on Monday suspended its listing on the Hong Kong stock exchange pending an announcement of a ” major transaction.”

Some reports suggest that the real estate firm Hopson Development Holdings plans to buy 51% of its property services arm.

With more than $ 300 billion in debt, Evergrande has been on the brink of collapse for weeks, which could have repercussions for the world’s second largest economy as a whole.

Fantasia is a less important player than Evergrande, but its troubles confirm concerns about the financial health of China’s real estate sector.

Rating agency Fitch downgraded Fantasia’s debt to “CCC-” on Monday , a note that states bankruptcy as a possibility.

Fitch indicates that the “liquidity situation of the company may be tighter than previously expected” and questions “the transparency” of the firm.

Fantasia , valued for its stock price at $ 415 million, reported profits of 153 million yuan ($ 24 million) in the first half of 2021 and said its revenue was up 18.5% from the previous year. to 10.9 billion yuan ($ 1.7 billion).

Both Fitch and S&P also downgraded the debt of another Chinese real estate company, Sinic Holdings, which has recently plummeted in value.

Another construction company, Fortune Land Development Co. , Said in March that it had defaulted on interest and debt payments of 5.3 billion yuan ($ 813.5 million).

Some Chinese developers are having trouble repaying loans after regulatory agencies last year tightened limits on their use of borrowed money , amid fears of mounting debt and the potential risk of a financial crisis. That has fueled fears of potential defaults and instability in financial markets.

Economists say Beijing can prevent a more general credit crisis if Evergrande goes into default, but wants to avoid bailing out the firm or its creditors as a warning to other lenders and indebted companies to be more disciplined.

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