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亚马逊云账号(www.2km.me)_The Fantasia chapter of the Evergrande saga is a Pandora’s Box

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Fantasia’s revenue is not even one-tenth that of China Evergrande Group, which is near the brink of a collapse; its US$12.9bil (RM53.9bil) debt is a fraction of Evergrande’s US$300bil (RM1.3 trillion)-plus obligations. Yet Fantasia’s failure to make a US$206mil (RM860.8mil) dollar-denominated bond payment on Oct 4 sent the markets tumbling.

UNTIL this week, no one cared about Fantasia Holdings Group Co, a smallish developer that ranks only 64th in China’s vast real-estate industry.

Fantasia’s revenue is not even one-tenth that of China Evergrande Group, which is near the brink of a collapse; its US$12.9bil (RM53.9bil) debt is a fraction of Evergrande’s US$300bil (RM1.3 trillion)-plus obligations.

Yet Fantasia’s failure to make a US$206mil (RM860.8mil) dollar-denominated bond payment on Oct 4 sent the markets tumbling.

Chinese high-yield dollar-denominated bonds witnessed their biggest selloff in at least eight years. What did Fantasia do to create this havoc?

Fantasia could have repaid the note but chose not to.

As a result, it opened a Pandora’s Box of financial nastiness.

In theory, Fantasia should have enough cash on its books to cough up the US$206mil (RM860.8mil) – unlike Evergrande, which is suffering a major liquidity crisis.

As of the end of June, the smaller developer sat on 27 billion yuan (US$4.2bil or RM17.6bil).China Evergrande HK

In late August, the company claimed it had about 10 billion yuan (RM6.48bil) in cash in the holding company level, according to an investor present at the conference call.

In early September, it repurchased US$6mil (RM25.07mil) worth of bonds, claiming “good liquidity” after the open market operations.

Fantasia has also had some success divesting assets.

Last week, Country Garden Services Holdings Co, owned by China’s largest developer, agreed to buy its property management unit for 3.3 billion yuan (RM2.14bil).

At that stage, Fantasia’s ability to repay this month was never in doubt. The day it squirmed out of the US$206mil (RM860.8mil), the company tore up another contract.

For the Country Garden acquisition deal, Fantasia had received a short-term bridge loan worth 700 million yuan (RM454.3mil) on Sept 30.

It had the money, but decided not to repay it on Monday when it was due.

Final fantasy?

Fantasia’s US$300mil (RM1.3bil) dollar bond due this December tumbled after the developer failed to repay notes due this week.

So is there some method to Fantasia’s madness?

From a strategic viewpoint, the company is playing a good game.

A series of top-down government policies to rein in debt and control prices have turned property development into a money-losing business. With no hope of economic recovery,

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