Zhuhai Huafa Repays Overdue Trust Products as Offshore Bonds Plunge Nearly 40% This Week
nashnova research
Zhuhai Huafa Group has repaid part of an overdue trust product, but its 2027 offshore bond has plunged roughly 38% this week to about 60 cents on the dollar — a state-owned enterprise carrying $62 billion in debt is now testing how far the implicit government backstop really stretches.
What actually happened?
Huafa Group failed to repay two trust products on time, triggering a sell-off in its offshore bonds.
The company has since repaid some investors on one of the overdue trusts, according to people familiar with the matter cited by Bloomberg.
This means → Huafa is firefighting, but the source of the fire — an overall liquidity squeeze — has not gone away.
How heavy is the debt burden?
Huafa carries total debt of roughly $62 billion and is asking some Chinese banks for repayment extensions and lower interest rates.
Its 2027 yuan-denominated offshore bond has fallen about 38% this week, trading at roughly 60% of face value as of Thursday morning.
In plain terms = the market is pricing this bond at a deep discount — investors are already preparing for the possibility they will not get all their money back.
Why does this company matter?
Huafa Group is 93.5%-owned by the Zhuhai State-owned Assets Supervision and Administration Commission — one of the city's largest SOEs, with landmarks including the 330-metre Zhuhai International Centre.
About half of last year's revenue came from property development and urban operations; the group posted a full-year loss of RMB 16.9 billion (roughly $2.5 billion).
This reflects a wider pattern: the property downturn is spreading from private developers to local-government financing platforms — state ownership does not confer immunity.
Can the state backstop still hold?
China Lianhe Credit Rating maintained Huafa's AAA rating earlier this year, citing expected "strong support" from the Zhuhai municipal government.
The same report flagged heavy debt, weakening profitability, and high dependence on external financing.
This means → the AAA rating is a bet on government willingness, not on the company's own ability to service its debt — if local government finances also come under strain, that assumption gets retested.
What is Huafa doing to stabilise the situation?
Over the past few days, Huafa has held one-on-one meetings with bondholders — both online and in person — to ease market concerns, according to people briefed on the discussions.
Its property subsidiary, Zhuhai Huafa Industrial, delayed its Q3 earnings release by two days to October 31, giving no reason.
In plain terms = the company is working two tracks at once: reassuring bondholders while buying time on the numbers.
市场有风险，内容仅供研究参考，不构成投资建议。