Eleven developers face delisting risk, Wanda woes grow

Eleven of China's distressed property developers including Shanghai Shimao face the risk of being delisted, S&P Global Ratings warned yesterday, as a Shanghai court ordered the freezing of 1.98 billion yuan (HK$2.18 billion) worth of shares in a Dalian Wanda unit, the mainland's largest commercial developer.

A delisting would reduce these developers' options for restructuring and make them more vulnerable to liquidation, the ratings agency said yesterday.

Property firms were among the biggest high-yield issuers in Asia and many aim to use shares of their listed entities to restructure offshore debt after having defaulted on their repayment obligations.

The Shanghai stock exchange delisted Sichuan Languang Development on Tuesday, the first such case for property A shares, and Sinic Holdings was delisted from Hong Kong in April.

S&P said the 11 firms at risk of being delisted, including Shanghai Shimao and Yango Group, have offshore and onshore bonds outstanding collectively worth US$21 billion (HK$163 billion).

These firms either closed below or just above 1 yuan on Monday or before they went into trading halt.

The agency said its empirical study shows investors typically get about 2-4 cents on the dollar in liquidation, and liquidation terminates jobs, meaning homes that buyers have bought may not be completed.

"(Delisting) closes options for Chinese developers to recover, and for investors to get their money back," said S&P credit analyst Esther Liu, adding it discourages parties from seeking an out-of-court restructuring.

Meanwhile, the 1.98 billion yuan worth of shares frozen by the court were issued by Dalian Wanda Commercial Management, the property management arm of Dalian Wanda. The shares were ordered frozen until June 4, 2026.

The court orders add to Dalian Wanda's woes. It is facing uncertainty over the timing of a Hong Kong IPO of its unit Zhuhai Wanda, repayments stress and a rating downgrade

In Hong Kong, developer Goldin Financial (0530) said the hearing on its liquidation petition has been postponed to July 21.