Accelerating asset disposals, the cash-strapped Shimao has put all of its real estate projects on sale, including residential and commercial properties, local media reported.
The move comes as the Chinese property developers are facing mounting pressure to negotiate with their creditors to ease a liquidity squeeze in the sector that is threatening to push more firms into default.
China Evergrande Group, the world's most indebted developer, is seeking a six-month delay in the redemption and coupon payments of 4.5 billion yuan ($157 million) bond in a meeting with bond holders. The outcome of the meeting is expected later Monday.
Evergrande is struggling to repay more than $300 billion in liabilities, including nearly $20 billion of offshore bonds deemed in cross-default by ratings agencies last month after it missed payments.
Reuters reported last week that China will make it easier for state-backed property developers to buy up distressed assets of debt-laden private peers, another step by policymakers to avert a liquidity crisis in the sector.
The Shanghai-based property developer has struck a preliminary deal with a Chinese state-owned company to sell its Shimao International Plaza Shanghai, a commercial property on Shanghai's Nanjing Road, for more than 10 billion yuan, the report said.
Daiwa said in a research report that Shimao will find itself in a vicious cycle of liquidity issues given the recent negative news, even though the firm said it is not in debt servicing default.
Shimao unit Shanghai Shimao Construction said Friday it was in talks with China Credit Trust to resolve a $101 million defaulted loan payment.
The missed trust payment would not accelerate payment requests in the open bond market, it added.
Reuters also reported on the same day that the unit has proposed extensions on maturities for two asset-backed securities (ABS) due this month totaling 1.17 billion yuan.
"We believe negative publicity will erode the confidence of home buyers and investors," Daiwa said. "This, in turn, would negatively impact Shimao’s future refinancing activities and contract sales prospects and lead to further deteriorating cash flows and liquidity."
It estimates Shimao to have around 23 billion to 25 billion yuan in corporate bonds, ABS and trust loans due for payment in 2022, noting it has only 16.1 billion yuan in cash.
Liquidity crisis
Chinese developers are facing an unprecedented liquidity squeeze due to years of regulatory curbs on borrowing, leading to a string of offshore debt defaults, credit-rating downgrades and sell-offs in developers' shares and bonds.
Small developer Modern Land, which has missed payment for its 12.85% notes due Oct. 25, 2021, said in a filing on Monday it has received notices from certain noteholders demanding early repayment of their senior notes.
The developer said it has been in discussion with these creditors for a waiver and it has appointed financial advisers to formulate an overall plan for feasible remediation actions.
The firm is also in talks with noteholders on a restructuring plan for its $1.3 billion of offshore bonds, it added.
"It's going to be the peak of repayment period and we'll see more developers default," said Kington Lin, managing director of Asset Management Department at Canfield Securities Limited.
"The market is watching how many SOEs will get more M&A loans to help the developers in distress."
Modern Land shares, which have been suspended since Oct. 21, sank nearly 40% on Monday morning to HK$0.23, a historical low.
As of 3:35 a.m. GMT, shares of Evergrande fell 3.4%, while Shimao's gained 3%.