China's Property Developers: The Great Wall of Surrender in 2025

China's biggest property developers are fiiiiinally coming to the table on their debt restructuring deals, but it's not because things are getting better - it's because everyone's given up hope that they will. Eight out of China's 10 most debt-heavy developers have basically finished restructuring their offshore debt. The whole sector has been a complete disaster since defaults started piling up back in 2021, with the total damage now sitting at $130 billion.

The change in creditor attitude has been pretty dramatic. Back in the day, bondholders would literally "bang tables" during negotiations and pepper executives with tough questions, fighting for every penny. Now? They're basically shrugging and saying whatever, let's just get this over with because they've realized the Chinese property sector isn't bouncing back anytime soon. Developer bonds are trading at around 10 cents on the dollar, which basically screams that investors think they're getting almost nothing back.

Take Sunac as an example. When their restructuring started in 2022, creditors were furious about a debt-to-equity swap proposal at HK$20 per share. They held these brutal all-day meetings with the CFO demanding better terms. But by early 2023, more than 75% had signed a deal with a much lower conversion price. Then Sunac ran into trouble again and needed a second restructuring, but this time it only took two months to wrap up compared to over a year for the first one. That's how resigned everyone's become.

The whole process has become weirdly efficient in its resignation. Restructuring talks that used to drag on for years are now wrapping up in months. Some creditors don't even bother joining conference calls anymore once the basic framework is hammered out - they've basically checked out mentally. Yuzhou Group spent over two years on their initial restructuring, but when they needed to revise terms later, bondholders barely put up a fight and it was done in months.

When companies can't even meet these lowered expectations, creditors are just hitting the nuclear option. China South City missed a couple of deadlines and proposed terms that were nowhere near the 70-80 cents on the dollar that bondholders originally wanted. So they just said "forget it" and pushed for immediate liquidation. Eight major developers have already gotten liquidation orders, including the infamous China Evergrande and South City Holdings.

Even with all the government measures trying to prop up the housing market, sales are still sluggish and developers keep struggling. At this point, as one expert put it, creditors have two choices: "Either take the terms or press the liquidation button - both work." It's like everyone's collectively decided that getting something now is better than holding out for a miracle that's not likely to come anytime soon.

#distressed