China’s Fantasia holdings joined its fellow real estate developer Evergrande, by defaulting yesterday on a $206 million bond payment. Its subsidiary Sinic also defaulted on a $108 million payment. The total liabilities of Fantasia are small ($12.8 billion) compared to Evergrande ($300 billion), but this indicates that a whole speculative sector is blowing out.
The Fitch and S&P rating agencies both downgraded Fantasia. S&P dropped it to CCC, which means “substantial credit risk” with a “real possibility” of default. “We lowered the rating because we believe Sinic has run into severe liquidity problems and its debt-servicing ability has almost been depleted,” S&P wrote.
