S&P cuts Fantasia

S&P said it downgraded Fantasia Holdings Group Co. Ltd. to SD from CCC and its senior unsecured notes that were due Monday to D from CCC. The agency also lowered Fantasia’s other senior unsecured notes to CC from CCC.

The downgrades follow the company’s failure to repay the principal of $206 million on its senior notes that were due Monday, S&P said.

“Fantasia's missed payment highlights its strained liquidity, despite its reported sufficient cash on hand. As of June 30, 2021, Fantasia reported an unrestricted cash balance of Chinese renminbi (RMB) 27.1 billion. This included about RMB 10 billion of cash at the holding company level, of which about RMB 1.5 billion was sitting offshore, according to the management. But as funding conditions worsened, it's likely that the cash was utilized for other repayments or was not accessible. At the same time, asset disposals have been slower than we expected, failing to bring in liquidity sources in time,” the agency said in a press release.

S&P also warned that the failure to repay the principal will likely trigger cross defaults in the company’s other bonds.

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