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Fantasia Holdings Fails to Pay $205.7 million bond, adds to Chinese Property Woes

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By Gina Lee

Investing.com – Fantasia Holdings Group Co. Ltd. (HK:1777) failed to pay a $205.7 million bond that was due Monday, becoming the latest Chinese developer to fall into a debt crisis.

Separately, property management company Country Garden Services Holdings Co. said that Fantasia Holding’s Colour Life Services Group unit failed to repay a CNY700 million ($108.55 million) loan that was also due on Monday and a default is likely, according to a Fantasia Holdings statement.

The management and board “will assess the potential impact on the financial condition and cash position of the Group” stemming from the skipped bond payment, the Shenzhen-based company added.

China’s property sector is coming under increasing pressure, with lower-rated developers facing the highest bond yields in a decade. China Evergrande Group (HK:3333), also suffering from debt woes, is heading towards a restructuring that could be one of the biggest seen in China so far and fears of a wider market contagion continue to persist. Trading in China Evergrande and Evergrande Property Services Group shares was suspended on Monday pending an announcement on a “major transaction.”

Prices on Fantasia Holdings’ bonds also tumbled on Monday as speculation on whether it would make good on its debt mounted. Its 6.95% of dollar-denominated notes, due in December 2021, tumbled nearly 30 cents on the dollar to 38 cents, according to data from bond-price reporting system Trace.

Fitch Ratings cut Fantasia’s credit grade several notches to CCC- on Monday, while Moody’s Investors Service also cut the company’s rating by one notch to B3. S&P Global (NYSE:SPGI) Ratings lowered its long-term rating for Fantasia Holdings to CCC from B on Sep. 29, due to “elevated risk” that it may not be able to implement a concrete repayment plan over the next several weeks for upcoming maturities.

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