Shuli Ren, Columnist

The Fantasia Chapter of the Evergrande Saga Is a Pandora’s Box

How a small player has begun the nasty denouement of China’s property developer crisis.

October 6, 2021 at 12:33 PM UTC

Updated on

October 6, 2021 at 7:03 PM UTC

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charterholder.

Thinking outside the wrong kind of box.
Photographer: Hulton Archive/Hulton Archive

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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 $12.9 billion debt is a fraction of Evergrande’s $300-billion-plus obligations. Yet Fantasia’s failure to make a $206 million 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.