On March 10, Bloomberg carried a news item which said no payment had been made towards a bond from Chongqing Sincere Yuanchuang Industrial, a unit of Sincere Property Group, with RMB444.5 million ($91.9 million) outstanding that matured on March 9, based on quotes from two bondholders. “The firm’s failure to repay on schedule would constitute a default,” said Bloomberg, according to the bond prospectus seen. On March 11, Bloomberg reported that interest on the bond has been paid, but not the principal.
Also on March 10, Sincere Property Group implied on its website that City Developments, which holds a 51.01% stake in Sincere, was tardy in making decisions related to financing, in effect laying the blame for the bond defaults at CDL’s feet. Sincere claimed in its statement that CDL is its parent. During a results briefing on Feb 26, CDL's management had reiterated that its balance sheet was ring-fenced from Sincere Property.
On the evening of Mar 11, CDL issued a statement, which clarified that “CDL in fact holds a joint controlling equity stake in the Chinese developer. Under the agreed legal structure of this JV, Sincere Property Holdings (SPHL), a company controlled by Sincere Property’s founder, and CDL will jointly control the JV on its material decisions while the existing operation team set up by SPHL previously continues to exercise direct oversight of its day-to-day operations and worksite matters.”