By Clare Jim

HONG KONG (Reuters] -Shimao placed all its projects up for sale. The move comes as Chinese property developers are under increasing pressure to deal with their creditors in order to reduce the liquidity crisis that has threatening to drive more businesses into default.

China Evergrande Group (the world’s largest developer) is asking for a delay of six months in redemption and coupon payments on a bond worth 4.5 billion yuan ($157million). This was in an informal meeting with bondholders. Expect the outcome to be announced Monday.

Evergrande faces difficulties in repaying more than $300Billion in debts, which includes almost $20Billion of offshore bonds declared in default by ratings agencies. It was deemed to be in cross-default last month because it failed payments.

Reuters reports that China is making it easier for state-backed property investors to purchase distressed assets owned by debt-laden peers. It’s another way policymakers are trying to prevent a sector-wide liquidity crisis.

Caixin reports over the weekend that Shimao Group Holdings a peer smaller than itself, had defaulted on its trust loan last Wednesday and put all of its real-estate projects on sale, both commercial and residential.

According to the report, a Shanghai-based property developer reached a preliminary agreement with a Chinese state owned company in order to sell Shimao International Plaza Shanghai (a commercial property located on Shanghai’s Nanjing Road) for over 10 billion Yuan.

The company didn’t respond to our request for comment.

Daiwa claimed in a research paper that Shimao is in a vicious cycle with liquidity issues due to the negative news. The firm however stated it isn’t in debt servicing default.

Shanghai Shimao Construction’s Shimao Shimao Construction stated on Friday it is in negotiations with China Credit Trust for a resolution to a $101 Million defaulted loan repayment.

It added that the missed trust payment will not increase payment requests on the open bond market.

Reuters reports that the unit proposed an extension on maturities of two asset-backed security (ABS) due in this month’s total of 1.17 Billion Yuan ($183.50 Million).

Daiwa explained that “we believe negative publicity will undermine the confidence of homebuyers and investors.” “This, in turn, would negatively impact Shimao’s future refinancing activities and contract sales prospects and lead to further deteriorating cash flows and liquidity.”

Shimao is estimated to be worth between 23 and 25 billion Yuan in trust loans, ABS, corporate bonds, and ABS due to payment in 2022. It also notes that it only has 16.1 billion Yuan cash.

LIQUIDITY CRISIS

Chinese developers now face unprecedented liquidity problems due to decades-old regulatory restrictions on borrowing. These have led to many offshore defaults, credit-rating downgrades, sell-offs of developer shares and bonds, as well as credit-rating downgrades.

Modern Land, a small developer, has not paid 12.85% on its Oct 25th 2021 notes. Modern Land stated in Monday’s filing that it received notices of certain noteholders asking for early repayment.

Developer said that it was in discussions with the creditors to obtain a waiver. Financial advisers were appointed by it to create an overall plan of possible remediation steps.

According to the company, they are also currently in negotiations with noteholders for a restructuring plan that would allow them to sell their offshore bonds valued at $1.3 million.

Kington Lin, Canfield Securities Limited’s managing director for Asset Management Department, stated: “It will be the peak period of repayment and we’ll witness more developers default.”

“The market is watching how many SOEs will get more M&A loans to help the developers in distress.”

Modern Land shares which were suspended on Oct. 21 sank almost 40% to HK$0.23, a historic low.

Shares of Evergrande dropped 3.4% as of 0335 GMT while Shimao gained 3 percent.