According to Aboluowang, China Aoyuan Real Estate Group, on December 2nd, said that it could not pay off more than $650 million in debt and could not reach any other agreement with its creditors.
China Aoyuan is one of the 50 largest real estate developers in China. The group is headquartered in Guangzhou city, Guangdong province.
After making this announcement on Dec. 3, Aoyuan’s stock price fell 11.88% at the closing market price.
China Aoyuan’s stock has been steadily falling since the beginning of June this year, from a high of 9.12 HKD to a closing price of 1.78 HKD on December 3rd.
Since October this year, Aoyuan has also been continuously downgraded by 3 major international rating agencies.
On Oct. 15, 2021, S&P Global Ratings downgraded China Aoyuan’s rating from B+ to B, and on November 16, further downgraded it to CCC.
Fitch Ratings downgraded China Aoyuan on November 19, 2021, to B-, and further downgraded it to CCC- on Nov. 24.
Moody’s Investor Service Company downgraded China Aoyuan’s rating from B1 to B2 on Nov. 5, 2021, and again downgraded it to Caa2 on Nov. 22.
According to an article published on Caixin on Dec. 3, expert Huang Lichong analyzed that China Aoyuan’s foreign debt would eventually cause the company to fall into complete default.
In addition to debt, China Aoyuan also failed to deliver products to investors on time. China Aoyuan published a “Letter to Investors” on its official website on Dec. 2, apologizing for their recent breach of investment projects.
The “Letter to Investors” proposes a deferred payment option, investors have two options: receive cash or receive in kind. Some investors disapproved of this plan, most of them are not Aoyuan employees, their investment amounts ranged from 100,000 yuan (approximately 16,000 USD) to more than 6 million yuan.