Zhuhai Huafa misses payments on two trust products, seeks loan extensions from 3 Chinese banks
Key Facts
China’s Zhuhai Huafa Group failed to meet payments due recently on two trust products, while asking at least 3 Chinese banks to extend the maturities of all its loans and lower interest rates, according to people familiar with the matter cited by Bloomberg via Yahoo Finance. The banks had not agreed on the extension terms as of the week before the report was published. The developments highlight financing pressures facing the group, which is controlled by a local government body, as China’s property sector continues to record declines in prices and investment. The reported default is limited to payments due on the trust products, while the negotiations with banks concern loan maturities and rates. Huafa did not immediately respond to a request for comment, according to Bloomberg.
Since the month before the report was published, Huafa has been asking banks to extend the maturities of all group loans and lower their interest rates. The terms had not been finalized as of the week before publication, meaning the discussions had not resulted in an agreement at that time. The report did not specify the size of the loans covered or the amount of the requested rate cuts. The requests come alongside missed payments on two recently matured products, separate developments in the group’s financing and fulfillment of its obligations. Bloomberg reported that the loan extension requests were made to at least 3 Chinese banks.
Huafa posted a total loss of 16.9 billion yuan in the previous year, according to a company bond issuance document released earlier in October. The company attributed volatility in profitability to weakness in the property market and said about half of the previous year’s revenue came from property development and city operations. This breakdown shows the extent to which a significant share of its revenue depends on activities linked to the property sector, according to company data cited in the report. In the same bond issuance document, the group’s assets totaled about 765 billion yuan as of March, while interest-bearing liabilities reached about 413 billion yuan. These figures provide a snapshot of the size of its balance sheet and financing obligations, while the recorded loss points to the impact of market weakness on its results.
Zhuhai’s State-owned Assets Supervision and Administration Commission controls about 93.5% of Huafa’s shares, according to the group’s latest bond issuance document. This places the group under the ownership of a local government body as property financing pressures extend to a state-linked company. Across the market, China’s new home prices fell 0.1% month on month in September, matching August’s pace, and were down 2.8% year on year after a 3.0% decline in the previous month. Prices have continued to fall annually since June 2023, according to data reported by Reuters via Investing.com. National Bureau of Statistics spokesman Mao Shengyong said the property market as a whole was moving in a positive direction, while real estate development investment fell 20.6% year on year in the first three quarters of 2026.
Property indicators varied across cities: new home prices in Tier 1 cities rose 0.1% month on month in September, while prices in Tier 3 cities fell 0.2%. Prices rose month on month in 17 of 70 cities, according to National Bureau of Statistics data cited by the Chinese State Council Information Office. In late September, China’s central bank and financial regulator announced a policy to support eligible homebuyers through mortgage interest subsidies. The price cap for homes eligible for the subsidy was set at 1.5 million yuan, according to a Reuters report. The measures come as weakness in the property market remains one of the factors Huafa said had affected volatility in its profitability.
Alongside property sector pressures, China’s official manufacturing purchasing managers’ index stood at 50.1 in September, up 0.3 percentage point from August and entering expansion territory. The production index rose to 51.7, up 1.3 percentage points from the previous month, while the new orders index came in at 50.5, down 0.1 percentage point. The employment index was 48.4 after falling 0.3 percentage point, according to China’s National Bureau of Statistics. The official manufacturing PMI for October 2026 is scheduled for release on October 31, 2026. The RatingDog manufacturing index for the same month follows on November 2, 2026, according to the economic calendar.