Huafa’s Interest-Bearing Liabilities Reach $61.9 Billion Amid Credit Defaults

Key Facts

Zhuhai Huafa Group had 413 billion yuan, or about $61.9 billion, in interest-bearing liabilities in March 2026, Bloomberg reported, citing a company document carried by The Star. The liabilities included bank and credit loans and bonds, as the group faced delayed payments on credit products and requests to extend loans. Bloomberg cited people familiar with the matter as saying Huafa failed to make payments on two credit products that had recently come due. It also sought loan extensions from at least three banks, the same people said. These developments put the group’s large liabilities under scrutiny amid pressure on China’s property sector.

The credit products had only recently come due when the payments could not be made, people familiar with the matter said, while available information did not specify the amount overdue. In a later development, Bloomberg reported that Huafa paid some investors amounts due on one of the overdue products. This indicates that the delay was addressed for some investors, while requests to extend loans with banks remained part of the picture described in the report. Available information did not provide details on the extension terms or the outcome of negotiations with the banks. Yu Yao, chief executive and founder of credit research firm RatingDog, said Huafa’s importance to the local economy made support from local governments likely.

The pressure extended to an offshore yuan-denominated bond due in 2027, which fell about 38% in the week through Thursday morning, dropping to around 60% of its face value. The move highlights the bond’s decline in market value during the period, alongside reports of defaults on credit products and loan extension requests. By contrast, Yu Yao said expectations for repayment of the group’s bonds were not highly pessimistic, linking this to Huafa’s importance to the local economy and the likelihood of support from local governments. Available information did not specify the scale or timing of any potential support. It also did not say whether Yu Yao’s view applied specifically to the offshore bond due in 2027.

Company disclosures show that Huafa’s domestic bond record also includes an outstanding issue with a balance of 10 billion yuan, carrying the code “26 珠华 01,” according to an official semiannual bond report. The bond matures on January 16, 2031, and has an annual coupon rate of 3.00%. The disclosure said Huafa had an AAA credit rating with a stable outlook, according to the latest rating cited in the report. These data provide a picture of some of the group’s domestic debt instruments, alongside its interest-bearing liabilities of 413 billion yuan in March. The details of this issue alone do not mean that its repayment terms or rating apply to the overdue credit products or the offshore bond.

Huafa’s news came in a month when China’s official manufacturing purchasing managers’ index fell to 49.3% in October, down 0.8 percentage point from the previous month, according to the National Bureau of Statistics. The index stood at 50.1 in September and 49.8 in August, according to data reported by The Associated Press; 50 is the dividing line between expansion and contraction. New export orders fell to 48.7 in October from 50.0 in September, while the production index declined to 49.8 from 51.7. These readings show month-on-month declines in manufacturing, orders and production indicators, in a broader economic context beyond the pressures facing the group. The indicators alone do not establish a causal link between manufacturing performance and Huafa’s credit position.

In the non-manufacturing sector, the business activity index was 49.7% in October, down 0.5 percentage point from September, while the services activity index was 50.0%, according to China’s National Bureau of Statistics. The figures offer a mixed picture of non-manufacturing and services activity, alongside the official manufacturing index’s fall below 50. The bureau is scheduled to release its monthly consumer price index report on November 9, 2026, at 9:30 a.m. local time, according to its calendar. The report will be a forthcoming point of reference for tracking Chinese price data after October’s activity indicators. The bureau’s calendar describes release dates as preliminary and subject to change.